Fundraising goes through the same cycles as the stock market,

When the stock market is going up it’s easier to raise funding.

When it’s going down it’s harder.

Raising funding in down times requires more creativity.

Here are some ideas on how to raise funding in a down market:

Use more grant funding to fill in the gaps.

The grant funding from the government continues regardless of the market.

Consider crowdfunding.

For smaller amounts of funding, this can help.

Use revenue-based funding for a portion of the raise.

These funds must be paid back but are non-dilutive to the cap table.

Consider low-end angel funding in which accredited investors write $25K checks.

For the right valuation, angel investors will come into the deal.

In addition to these funding options, consider customer funding.

This requires building custom projects for specific customers but if done right can continue to build out the platform and pay the bills.

On the strategic side, shift from a high burn rate to a low burn rate and grow organically for a while.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.