How to Build a Startup and Raise Venture Capital

How to Build a Startup and Raise Venture Capital

This article is intended for young entrepreneurs or anybody thinking of starting their own business. 

The goal of this article is to show you the most affordable and low risk way to start your own business. 

You don’t need to jump in with all guns blazing and invest a bunch of money, in fact the opposite is a more effective strategy. 

Step 1 – Market Research

You might think your business idea is the greatest thing since adult magazines removed the stars from their models, and maybe you’re right, but get some data first.

I learned this the hard way, don’t follow my lead, learn from my mistakes…

Setup a Facebook Business Page

You don’t need to register a business name, open a bank account or buy a domain name to have a Facebook Business page. 

It’s absolutely free and you can set it up in under an hour. 

Then write a post describing your idea. 

Don’t worry, nobody will steal it and if they do the market better be big enough for more than one competitor or your business wont last very long anyway.

Example

If you want to open a pet food delivery service for example, make a page highlighting your intended service. 

Tell people that you plan to launch your business in 60 days. Tell them the area it will service and how it will benefit them. (Unique Selling Points or USP’s)

Then ask them for feedback on your idea. 

Would you be interested in this service, what do you think of it etc?

Lastly boost the post to your target audience with a small paid ad. 

The upside with Facebook is you can target specific demographics. 

If your pet food delivery business is going to service Denver for example, target people strictly from Denver, or better yet, individual suburbs. 

This will give you real life feedback and actionable data. 

You can then decide if there is enough demand, or if you need to make improvements to your business plan.

 

Step 2 – Build a Customer Base First

Let’s assume feedback was good and there is indeed demand for your new business idea. 

Whats next?

Build a one page website with a lead form…

This is referred to as a pre-launch page and these are the steps you should follow. 

  1. Get a Company logo on Fiverr or Upwork
  2. Build a 1-Page WordPress Site (outsource if need be)
  3. Include a Feedback form to capture details
  4. Market on Facebook

The idea behind your one page is site is to show business intent. 

A logo on Fiverr costs $5 and you can outsource a 1-Page WordPress site on Upwork or similar for under $100. 

Use this page to further highlight your business idea and then incentivise people to join your Pre-Launch Email Notification list. 

The aim is to get a customer base before you launch.

If you can get 50-100 people to signup and be notified about your service when it launches, you make money from day one. 

This also helps you raise venture capital if you need to. 

The entire setup and advertising costs for this phase is under $300 and you have a target audience to buy your product or service from day one – that’s awesome! 

Step 3 – Raising Venture Capital

If you don’t need to raise money from outside investors DON’T.

You want to run your business and not spend every 3 months writing reports or having fortnightly investors meetings. 

It’s a pain in the arse. 

If you have to raise money however, the first two steps will help you. 

Pro Tip – Investors Don’t Care about Your Business Plan

Don’t waste your time writing a 50-page business plan, nobody cares. 

An investor cares about proof of concept. 

If you want to raise Venture Capital, you need a prototype or show of demand. 

In this case you can show a potential investor that you surveyed 5,000 people on Facebook (whatever), received x amount of feedback and captured 100 potential clients pre-launch. 

You can then run investment projection estimates from there.

By doing this legwork in Steps 1 and 2 it shows the investor that you are a person of action. 

It also clearly shows that there is proven demand for your business idea. 

This gives you a lot more bargaining chips than some guy with 50 pieces of paper and a dream. 

You’re not the inventor of Coca-Cola, sorry 🙂 

Final Step – Launch Your Website

Now that you’ve established demand and created a potential customer base, you can go ahead and invest money into your website. 

Too many gung-ho entrepreneurs rush in and build a killer website costing untold amounts of money without doing any market research?

Why would you do that?

That’s like building a huge hotel in the middle of a desert. (Vegas excluded)

When you launch your website be sure to include a blog for your SEO (Search Engine Optimisation) efforts. 

I can’t stress this enough. 

If you’re a startup or small business you need to write content so you can create authority for your business, and get visitors to your site without paying for every click. 

The long term benefits of SEO are exceptional. 

I’ve personally created a million dollar company just from SEO – true story. 

If you need help in this regard, contact me and I’ll point you in the right direction. 

Summary

You can test a new business idea for under $20 thanks to social media. 

This changes the game for everyone as there are no longer excuses for not having funds etc. 

Follow the first two steps in this article and if you do need investment, it will be a lot easier to obtain. 

Starting a new business is tricky and even in Silicone Valley only 1 in 10 make it. 

I strongly suggest you read Peter Thiel’s book on lean strategy called Zero to One before you make the leap. 

If you can afford it hire a Startup consultant who can advise on project development. 

I use development companies in India and Pakistan to greatly reduce costs but there are challenges there too. 

For example, you need really great spec design to ensure smooth project delivery.  

If you need advice or help with your Startup contact me and I’ll happily point you in the right direction, or provide assistance as required. 

If you have any tips you’d like to share, please email me and I’ll credit you accordingly. 

Wishing you success.

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