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10 Ways to Fund Your Startup : Page 2

How to fund your company through investment, the company's own revenues, angel investors and other ways.


5) Revenue From Selling Things

Some people think that generating revenue from selling things can fund their start-up. Surprisingly, the math for that type of funding can be even worse than making money through advertisement. After all the possible discounts and affiliate commissions, the return is not a whole lot more than the $5.00CPM that may be earned from advertising. A good supplemental strategy to serving ads or selling things, is to do both of them at the same time.

A person who may not buy anything, may click an ad, and the person who may not be looking at ads might actually purchase a product they are looking for. When possible, converging these two revenue models may help increase revenue per visitor.

6) Working Part Time

One great way to fund your startup is through having a part-time job. It helps you avoid giving up control of your company which would happen if you took investment, and does not create a mess out of your monetization strategies which might otherwise force you to take shorter-term approaches and poorly affect your decisions. Plus, having a part-time job would allow you plenty of time to work on your own company.

7) Startup Incubators

There are many incubators available to start-up companies. The most popular is the Y-Combinator started by Paul Graham. If you get accepted to any of these incubators, your advantages over almost any other company become unreal. First, they provide a little cash. Their investments average from 10k-25k. Second they provide facilities like office space and sometimes even housing. On top of that, they provide mentorship and help in raising further rounds of funding. Further on top of that, they give access to plenty of PR opportunities because many of the technology publications love to write about incubator companies.

The down side for such incubators is that they are very difficult to get into. Your idea and possibly the founding team must be in the 90th percentile in terms of quality and potential. In addition, the incubators often require the founders to move to the city of the incubator. So you may be forced to uproot your life in a big way if you do get in.

The application process can take some time, but if you get accepted, it should have positive effects on your business and overall career moving forward.

8) Donations

Does this still work? No, it does not work by itself unless you do a couple of things very right like be extraordinarily giving and helpful to your audience, or undercharge for your product to the point of making donations seem plausible.

If you do great things and undercharge for it, you may get a small trickle of donations if you ask for them. They may help you if you are struggling to earn revenue since I outlined just how difficult it is to make money simply being an ad publisher.

9) Increasing Margins Through Product

One great way to fund your company is to partner intelligently to up-sell larger things. As an example, lets imagine that our site makes money only through ad sales. To remind you, we calculated that for most sites, it would take over a million monthly page views to make any significant revenue from it. Now lets imagine as an example that our site is related to nutrition. On average with the ad-revenue model, we make pennies per visitor, but if we partnered with a nutritionist we could increase that. If we suggested that the visitors to our health site might benefit from talking with a nutritionist, and recommend one, then we can do a revenue-sharing deal with that nutritionist. If we figured out how to track whether visitors from our site became their customers, we could make more money since a nutritionist can make up to thousands of dollars from a long-term customer.

In this scenario, the nutritionist is happy because their practice and client base would grow. And the extra commission would help fund our company and fuel growth without needing to reach the astronomical numbers of visitors if our source of funding was from ads-only.

10) Increasing Margins Through Team Structure

I am no economist, but a very good supplement to making money is not spending more than you have to. In order to make the funding of your start-up easier, you can decrease the amount of capital that you need. Try to work harder and learn more skills which will allow you to hire less and achieve more. A web start-up is a mixture of rocket science and hard work, but the hard work outweighs the rocket science by a very large margin. If you work your tail off, you will need less money because you will be accomplishing more with less.

Bonus Idea: Industry Contests

In the web industry there are many annual contests with cash prizes worth thousands of dollars. You can enter them and hope to win. Just like anything, entering these contests takes up time which can be devoted to the actual startup, so be careful. Additionally, many of these contests have manipulated voting through the inside or by people who figure out how to game the voting system. Few are 100% fairly run since when money is on the table, people try to get ahead however they can. All that said, winning an extra 10 or 50k can make a tremendous difference.

Alex Genadinik is the founder of San Francisco Hiking Community and a Startup Consultancy. Please say hello and continue the conversation on this topic on Twitter @genadinik
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