Practicals of Lean Startup - Part 3
When going lean with your ideas and venture, there are several "potholes" that you must avoid at all costs. Let the lessons I have encountered in my over 20 years of founding at least 17 businesses help you avoid it.
My late dad always said to me, "share your failures". It's the main reason why I am writing these practical tips. Today, my tip for the would-be entrepreneur is how to fund your ideas.
There is nothing more difficult in your pursuit than finding the money to pay for your entrepreneurial idea. Be prepared to suffer rejection after rejection. Be prepared for people who will laugh at your business plans and tell you how "stupid" your logo looks like, and how amateurish your pitch deck appears. For those of you taking this path of entrepreneurship, be prepared for this; as long as the sun shines, you will face it. Finding money for your startup falls into two baskets: 1) scrapping and 2) other's
- Scrapping is the tedious pursuit of finding money through personal ingenuity. It means listing everything and anything that you can sell off (old DVDs, CDs, electronics, shoes...) on eBay, to raise the money. Scrapping also means "renting" yourself out to other businesses, as a freelancer. As a writer, I've done 87 ghostwriting projects on subjects that aren't my favourite, but which helped my clients and put money in my pocket. From ebooks, articles, and novels, there is so many writing works out there. If you are great at drawing, there are equally vast amounts of design gigs all over the internet; logos, sketches, caricatures to web design. Are you good at math, then there are accounting and algorithm design gigs ready for you. There are even weird ones like anonymous shopping, where companies pay you $100 to shop and provide a report of your experience. There are several passive methods for scrapping and generating additional income. Scrapping brings in money at the slowest pace but it is free from the burdens of the alternative.
- Others are the means by which you can fund your startup. This is a cauldron of chaos and many times, insanely complex. Convincing other people to part with their money (angel investors) or other people's money (venture capital) is absolutely difficult. If this is your path, then be prepared for a "lot of time-wasting" and "weird customisations" of business plans, pitch decks and a ton of costly "nonsense" with zero guarantees that you'll be funded. Taking other people's money also means giving up on several aspects of your ideas to accommodate theirs. It also means that decisions on how your idea comes to the world are decided by people whom you are only associating with simply because of money. There are also legal consequences for taking these monies: debt-buying, shared patents, shared owners, majority shareholding, management buyouts, exits and other binding arrangements that will test your sanity. If you fall prey to so-called "vulture capital" or attempt to play ball with a "hedge fund", your life will never be the same. One way to navigate this is to use the services of a reputable lawyer. Do not hire some "basic lawyer"! Find yourself the meanest and ruthless lawyer you can find. They know exactly how to work "the system". There is a somewhat third option called the SUBSIDES. This route is also not the most ideal. It involves a convoluted set of "unattainable" rules. After successfully raising money for several NGOs, I would like to point out that the subsidy route is the MOST difficult. It's been designed that way; luring you with the "possibility" of funding, but the truth is that, you will literally have to write tens of thousands of proposals before succeeding with one. There is also a catch; all subsidies require transparency with the use of funds and a public declaration of funds. This will push any entrepreneur into the ugly confines of "lying" about their proprietary product. Generally speaking, it would also be difficult to file patents with subsidies. You don't want to lie because... it will come back to bite you hard. Visit any of the EU subsidies and you'll be overwhelmed by the sheer number of requirements and documentation needed to access a couple or euros or dollars for your venture. Be prepared to pay a couple of 1000s for a professional service provider to help you navigate the waters of the
subsidyenvironment; with no guarantees of getting the money.
Funding your startup can be an awesome and rewarding experience. It will teach you valuable lessons about human interactions and money management. These possibilities should spur you on to successfully bringing your ideas to life. That's how you fund your startup, lean. It's my two cents. Stay professional.
About the author: Sal Souza is an International Designer (Graphic, Visual, Multimedia, Broadcast Media, Industrial, User Interaction, User Experience) and IT Consultant with expertise in New Media, Web 3.0, IPTV, DTV, Media Production, Product Prototyping, Desktop Software, Interactivity, Mobile Applications, Traditional Knowledge, Geographical Indications and Cultural Goods. He lives and works in Nijmegen, The Netherlands.