How to raise your first investment for your startup from your friends and family!
Starting a startup is always so hard. After the finding the best(!) business plan you start to find some easy money to validate your idea is worthy to make it real.
Before to pitch your idea to your parents, please be sure that you have already pass those steps =)
- You have to have an idea that make you insomnia, you can’t sleep easily because of thinking that how huge is potential of your startup
- You have already talked minimum 100 different people about your startup idea & be sure that almost %50 of those people have to understand what you will try to build.
- Do not think every feedback is so crucial for you. Try to find the best market need. Find what the market, the people who will use your product want from you.
- Be sure that you have at least 1 another person who believes your idea almost like you believe it.
If you have already passed those steps then we can continue about asking money from your friends and family! =)
Firstly I have to say that ‘It’s not what we ask, it’s how we ask’
There are lots of different ways to ask for money, and most of them are really awful. What we want to do is position the ask in a way that makes it clear we’re asking for money, but also clear that it’s not more important than the relationship.
Look for buying clues first
Before we ask for money, we have to make sure there’s some level of interest in the venture at all. We can do this by asking if the person we’re talking to would have any interest whatsoever being involved at any level whatsoever.
We can begin by getting the sense for whether they want to be an Advisor, which could lead to an investor later. We’re looking for some indication that they are willing to spend time and resources toward this venture. If they don’t seem to be leaning in at any point, asking for a bunch of money is definitely not the right closing move!
Leave room for a polite exit
Good ol’ Uncle Mortimer is going to be far more freaked out if we try to box him in with our ask. If we say “Will you please invest $25K in our startup?” then we’re forcing an immediate, “yes” or “no” answer. That’s not a problem if the answer is a resounding “YES!” But let’s face it, it’s probably not that. That’s where our challenge comes in.
Instead, let’s give him an out. Let’s ask “We’re raising $25K for our startup. We’d love to see if you or anyone you know might be interested in getting involved at some point.”
In that simple sentence, we just gave Mortimer a chance to say “No” to being an investor but offer some help on where he might be able to point us elsewhere. By leaving the time frame in which we hope to secure the investment more open-ended (“at some point”), we’re not forcing him to pull out his checkbook immediately.