No One Can Raise Funding for Your Startup Except You

February 23, 2010 by Ben Yoskovitz 34 Comments

One of the big roadblocks that first-time entrepreneurs face is the issue of raising capital. There are no easy answers. But one thing is certain, the only person that can raise financing for your startup is you.

There are enough high quality resources out there on raising venture capital and angel investment. And there are some fairly well-accepted best practices on how to raise capital as well. You’ll have to do your research.

There are plenty of fairly easy ways to get connected to venture and angel investors too. That means more research and legwork.

There are probably people in your network that have done it before and can provide advice. If you need help, you have to ask for it.

If you’re waiting for an existing investor or partner of some kind to do the work for you, you’ll be waiting a long time. It’s most likely not going to happen. And unless you’re prepared and reasonably well-organized, your friends, colleagues, existing investors, partners, etc. will be hesitant to open up their rolodexes for you, because they’re putting their reputations on the line.

Note: Please be wary of consultants that are going to help you raise money for a fee (upfront or for success). This is a scary, seedy, dangerous arena. You can learn more at Jason Calacanis’ Open Angel Forum.

Raising venture capital is not something that most of us have experience in when we first become entrepreneurs. And when you first start a company the only way to get experience is do your research, learn as much as you can, prepare the documentation & pitch, and get to it. There’s no excuse for not jumping in and figuring it out.

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Jeff Ski Kinsey

Amen. Why didn't you write this three months ago? Just curious? {grin}
efthimios

A great post. Keep up the good work
Benjamin Yoskovitz

Jeff – Well I wasn't raising money 3 months ago, and I also wasn't talking to a bunch of other startup guys at the time either. Recently I've been re-connecting with many contacts and they're out pounding the pavement; some more successfully than others. So that's what inspired this post … now …
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Kevin

Hey Ben, just came across your blog and I can already tell it's one that needs to be bookmarked, nice post – you got yourself another follower.

Cheers,
Kevin
paul smith

nice work!!

the column written by you was highly motivating and will sure help lots of people by guiding them right path and helping them in understanding there capabilities.
ally

thanks
Sim

Hi,

You say:
“Please be wary of consultants that are going to help you raise money for a fee (upfront or for success). This is a scary, seedy, dangerous arena.”

Why?

Kindly regards

Simon
Jeff Ski Kinsey

Great answer. One more validation of a principal I preach:

“The guy or gal who knows, is never at the whim of someone that thinks they know.”
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Roy Jones

or how about starting a $100 business?
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kanishk24nov

I just read it your site every thing is ok and one thing i would like to suggest to you if it possible please add some picture which make you site perfect.
Adam

Well of course that's very true that only you can do something for your start up, for the initial start up of the business no one will come to rescue to help you.
Darryl Zide

I agree that there is no excuse for not being prepared when going for financing. Most always you will need to over prepare than under in todays economy better to have all the facts when the time comes.
Samantha

Sometime as an entrepreneur – you have to roll up your own sleeves and more forward. You have to do this type of groundwork yourself. You need to be the face and the brand. Great article.
David

Prepare, prepare, prepare! simple as that. You wouldn't walk into a job interview without preparing first…its no different with an investment pitch. You want to be able to confidently approach every question.
Johns

Actually, unknown to many is the fact that one of the biggest scams currently targeted at entrepreneurs is the one run by the folks you mention, and it goes something like, 'just give us your business idea, we will find you capital–provided, of course, you pay us something in advance.' The problem with the whole thing is that they make the agreement such that there are really no guarantees, so that they hook you up with some 'investors' (actually their scam cronies) who 'analyze' your business idea, and, if they find it viable, 'finance you.' But somewhere down the line, they notice a problem in your business idea, and tell you 'sorry, but we can't finance this.' You are in a dead end. You can't force them to finance you. And you can't go back to the guys who sent you the 'financiers' way, as they already did their part. You come to think of it after reading a post like this one, and you realize that it was, after all, about the fee you paid them upfront. Otherwise the whole thing was a set up.
Bottom line? Nobody, indeed, can raise initial business financing, but you.
rob

Are there any decent websites to hook up with angel investors? I have some ideas i want to throw at them.
SKI

I agree too! But sometimes life make it impossible, so you have to look for partner.
Well I need to say that your article is a good post . So thanks to you!

SKI.
SKI

I agree too! But sometimes life make it impossible, so you have to look for partner.
Well I need to say that your article is a good post . So thanks to you!

SKI.
randyjames

I agree with the authors statements on this article. If you want it, you can get it. Plan your business, set up goals, build a great team and go for a VC or Angel investor funding!

You can check out what others have already asked and the answers they get about VC and Angel funding capital on Startups.com. This http://bit.ly/cN9b7p is one of the questions where I find the most interesting answers! You can place your own questions too.

Good luck!
mp3soul

thaks man
Benjamin Yoskovitz

Try http://angelsoft.net – although “throwing ideas at investors” isn't likely going to work…
TheMagHouse

Just go the Dave Ramsey route, and make some money first. If you can't make some proffits without spending big bucks, find something else.
Sell Gold Tampa

Glad I saw this.
this is very useful.
keep going on.
samwinn

Well I agree with the author.
But sometimes it is impossible, so you have to look for partner.

Good luck!
samwinn

Nice work author!!
But sometimes you really have to look for partner.

Good luck!
Eugene

Very well said. I agree with you that you can't afford to wait for investors and partners, you have to be one to make the first move but if you can put up the funding yourself, the better. The experience you gain here will go a long way should there come a time for you to expand or venture into a new business. Great post by the way. Thanks!

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