So here you are, a for-profit / non-profit / social entrepreneur, your business plan is done, your powerpoint is ready and you’re meeting with a potential funder. You’ve got a crisp elevator speech, you present your pitch and then the funder says, “this is a very interesting idea but why don’t you come back once you’re up and running.” (See http://www.xigi.net/2006/05/28/mamamikes-response.html)
This is an all too common experience.
Fundraising is an incredibly time consuming affair. Despite the stories one hears of people being funded based on an idea on the back of a cocktail napkin, for most of us it just doesn’t work out that way and some fabled entreprenuers didn’t start that way either.
“But I need funding to launch my vision” you say. So, what’s the thinking behind this statement. Let me put my psychologist hat on and list some of the concerns:
- I want to dedicate myself full-time and I need money to pay the rent
- I want to build my vision on a grand scale and that takes money
- I need to pay my .. software developers, graphic designer, staff
All these concerns are valid. But fundraising, at least at the very beginning, isn’t the only way to address these concerns.
What often happens to entrepreneurs in real life is this. They knock on doors, give presentations, are told they have an ” interesting idea” and 9 months, a year, two years go by.
They’re still eating beans, may still have their day job or their fundraising efforts are subsidized by a spouse or partner and their vision is no further along than when they started the fundrasing process.
Just Do It
So how do successful entrepreneurs get their vision off the ground and get funding for growth? They Just Do It.
Jobs and Wozniak, Apple Computer
Both Jobs and Wozniak had day jobs, at Atari and Hewlett Packard, while they tinkered around with computers, showing them off to their friends in the Home Brew Club. Steve Wozniak showed the early prototype of the Apple Computer to his employers at HP but they weren’t interested. So, Jobs and Wozniak formed Apple Computer. The PC revolution might have been very different if HP had said yes. See link for Apple II timeline.
Funding for prototypes: their day jobs
Early office/workshop: Steve Jobs’ parent’s garage
Apple Formed: April 1976
First Sales: July 1976
Steve Wozniak Quits HP: Oct 1976
Outside Funding: Mike Markkula, 1977
Jeff Bezos and Amazon.com
Here’s an excellent link chronicling Jeff’s life and the creation of amazon.com
Some of the high points:
Funding for conception of Amazon.com: his day job at D. E. Shaw, then $300,000 from Bezos personally to fund the first two years of Amazon after he quit his day job
First office: His two bedroom home in Seattle
First office furniture: tables he’d made out of doors from Home Depot for less than $60 each
First Prototype: July 1995 with 300 beta testers
Early Sales: $20,000 in book sales by Sept 1995
Shipping Department: Jeff Bezos’ garage
Initial Outside Funding: Turned down by VCs, Bezos raised $1.2 million from angels. Jeff’s mother was an early investor as well.
Intial Venture Capital: 1996, Kleiner Perkins Caulfield and Byer – 2 years after Amazon.com was incorporated and 1 year after amazon.com was launched on the internet.
So, given the choice between knocking on doors for funds or eating beans and rice every night and building your dream, I choose the beans and rice. Funders like to invest in people who can execute on a vision. The best way to prove it is to do it. Do what you can with what you have. Demonstrate resourcefulness, frugality, elegance of design, economy of effort. Build a prototype. Make a few sales. Get a network of supporters and beta testers. Let your community evangelize your good works. The money will follow.
Need more inspiration? What would McGyver do?
Originally posted on http://fellows.rdvp.org/margaritaquihuis/blog/fundraisingvsdoing