The INC Blog provides insights into funding for the first-time entrepreneurs, which is most of us. ;-)
The most important thing to understand that most of the time we need to get the money from our savings, friends or family. Banking our ideas on VCs, angel funding etc does not yield results as a very few percentage of all start-ups get this. This may sound as a hard way but this is generally the only way to start the show.
INC says, "Many business owners who lack a proven track record as business owners are still finding financing hard to come by, notes Lawrence Gennari in his Boston Business Journal column, "New at the game? Financing tips for first-time entrepreneurs."
Here are a few of his few basic rules emerging businesses should follow when trying to find first-time financing:
Recognize the odds. Venture financing frequently is not the answer. He cites Inc.'s 2003 Inc. 500 list as an example: of the 500 companies that made the list, approximately 2% cited VC as a source for start-up capital.
Pursue parallel sources. Tap VCs, angel investors, friends and family, etc., simultaneously.
Plan to fund to benchmarks. Many entrepreneurs seek more than they really need to start-up. Seek to fund milestones, not the entire lifespan of your business.
Develop a strategy beyond serendipity. Introductions get your foot in the door, but don't ignore having the right fit with potential investors.
Surround yourself with experience. Advisers, directors, etc.
Avoid simple business plan mistakes. Don't forget the basics: size of target market, logic and soundness of revenue model, and experience of management.
Recognize the value in rejection. Feedback is priceless, regardless of whether you secured the capital.