Since we’re on this journey together I’ll share with you what I’ve learned about funding and why I chose crowdfunding. To my knowledge, there are 6 ways to find funding for your business.
- Bootstrapping: This means financing your company without external help or capital. This is how I started Vertical Method. I borrowed against our house to open the SF brick and mortar so I could test my theory and develop my method.
- Friends and family: While it may be intimidating to hit up your loved ones for money, they are the people who know you best and, in most cases, the people who believe in you. I did not choose this route because my family broke apart in 2014 when my father died. I was teaching a class at Vertical Method when I found out. It derailed me for years. He was my best friend, my lawyer, my sounding board, business guru and spiritual advisor. In short, my #1 person. In some ways Vertical Method saved my life because it gave me a reason to get out of bed each day and help people, which is the only way to survive grief. If he were here today he’d be my angel investor.
- Angel Investors: These are affluent individuals, or a group of individuals, who pool their research and resources to provide modest amounts of capital in exchange for equity ownership.
- Crowdfunding: This is what we’re doing on Women You Should Fund. This type of funding is gift based, where backers commit to buy early versions of the product months before it is released. This allows for a wide pool of small investors.
- Equity Crowdfunding: These sites allow you to connect with a large group of distributed angel and institutional investors, usually for a free.
- Venture Capital: When looking for serious funding (at least $1million) a VC firm is the way to go. They will request more information and they will spend more time on due diligence and they may ask for some control, like board seats.