You’ve done your launch, you’re getting momentum, and you have your first orders, but you are wondering what will be the next step in growing your business? Well, most probably, you will need CASH. As this is the secret ingredient behind every successful launch. Don’t have any? Read on and find out how to make it happen!
Where Do I Get the Money?
With any type of business, you need to have some capital available. Sometimes, your business can grow from the cash flow of your operations. Often times if it goes well and fast, you will need access to capital. Luckily, there are different ways to raise money.
Crowdfunding with Sprint CF
We talked to Karim Vartanyan, the fund-manager at Sprint Crowdfund about raising money through crowdfunding. Sprint CF is an investment fund that specializes in the Crowdfunding sphere and provides a budget for marketing purposes such as promotions, ads, and paid media. They don’t work with prototyping or production. The process is based on a trilateral relationship between the Crowdfunding agencies, campaigners, and Sprint. The campaigns are funded through the approved agencies they work with, which means the funding has to be managed and spent by them. The maximum budget limit for boosting is $100,000 per campaign.
These agencies set goals and define the campaign strategy. When the campaign gains momentum and hits the goal on Kickstarter or Indiegogo, they jump in, boost it, and keep that momentum until the end of the campaign to maximize the returns. As their name indicates, once they jump in the whole process takes from a couple of hours to 1-2 days. They charge their services when the platforms make the payment in the amount of 5% on a 30-day basis.
If you do crowdfunding on your own, you won’t be able to partner with companies like Sprint CF. You won’t be able to raise any capital because you lack the necessary tools. This is why 70% of campaigns fail and the other 30% raise on average $10,000. There are a few great agencies out there. The one IdeaPros would recommend is LaunchBoom.
First, they will validate the product making sure there’s a market for it. For a fixed amount of money (below $10,000) they do a mini-campaign over 60 days. They start building the audience, getting a big email list, creating advertising materials, creating Facebook and Instagram ads campaigns, understanding the market, and how your product fits into the market.
At the end of those 60 days, if everything looks good then they will offer you a partnership. You will need a budget to get started, but you know you can count on a group like Sprint CF that will jump in later on. If their testing doesn’t give expected results they won’t work with you. However, they will let you use their system and structure to raise the money yourself, which will improve your chances significantly.
Apart from a regular crowdfunding campaign, there are equity Crowdfunding groups like Fundable and CircleUp that are more suited for apps. Equity Agencies are similar to your mini equity raise it is not easy to get there. You have to have the right product, but it can be a good opportunity. CircleUp will give you credit and do an equity play with you. It is worth checking it out, as they have worked with many household names.
Zero-Interest High Limit Credit Cards and Loans
Different credit cards will lend you up to $100,000 for a period of 12 to 24 months. Some of the options are the Chase Sapphire Preferred Card, Capital One Ventures Card, Citi Diamond Preferred, Discover, Capital One Quicksilver, and Bank America, and American Express has a Cash Magnet Card. Some of them do loans, too.
As a brand new business, you are not going to get a business loan because you don’t have assets or revenue. Unless you have another business, in which case you may even want to consider an SBA loan. An SBA loan will lend you up to $5 million if you have a credit score of 600, have been in business for at least 2 years, and you have proof that you tried to get a regular loan from the bank without success.
Another alternative is to consider a home equity loan or borrowing on your 401k. You can borrow up to 50% from your 401k as long as you’re paying yourself some minimal interest.
If you believe in yourself, in the product, the app, or the idea that you have, you’re going to do whatever it takes to make that work. It will happen if you believe it.
The “Idea Pros” at IdeaPros have the resources, experience, and tools to help you at this step or any step in the entrepreneurial journey.
We partner with entrepreneurs at any stage and who are ready to invest their ideas. Apply for an interview and let’s explore partnering together.
Want to see the products we have launched? Check out IdeaPros Launchpad!