Jeff Nock is CEO & Founder of Prescient Consulting, LLC, a consultancy that helps funded early stage and mid-cap companies achieve their vision and growth goals.
By offering services that include C-Level mentoring, strategic planning, business planning, financial/budget management, business model ideation/evolution, market analysis, competitive niche analysis, business development, operational efficiencies, and brand evolution.
While many people have business ideas that could become viable companies, few people have the energy and drive to turn that idea into a company and even fewer people can raise the capital necessary to get their company off the ground. Unfortunately, many entrepreneurs will find themselves repelling down much more quickly than it took to launch their idea. Jeff Nock shares his insight on finding funding for startups.
The first option for raising money is typically called bootstrapping or friends and family funding. This includes the entrepreneur utilizing personal savings, credit cards, or money from friends and family to fund the initial cash needs of the startup. The risk, of course, is that if the business never becomes profitable then the entrepreneur ends up with depleted savings and/or a huge credit card debt or frustrated friends and families. Nonetheless, Jeff Nock has seen companies raise hundreds of thousands of dollars for their business from friends and family with little or no loss of equity.
Crowdfunding through social media allows for smaller investments from individuals or organizations, but on a larger scale of reach and frequency. Crowdfunding creates public interest, free marketing, and in many cases, significant funds to launch your business from the ground up. However, there is intense competition from other business ideas, non-profits and others that often results in companies raising very little for their company. Jeff Nock advises that even though the rate of success may not be high, depending on the business idea and the public’s interest in that idea, many companies have raised considerable capital through crowdfunding.
For both friends and family money and crowdfunding, it is often possible to raise funds before the product or service is even available. This initial funding allows the startup to get off the ground and show enough legitimacy to potentially gain the attention of the next level of funding which comes from angel investors. Angel investors, in return for a small portion of the equity in the startup, invest in very early stage companies for which they truly buy into the business idea, the entrepreneurs or both.
There are also federal (SBA-Small Business Administration and others) and state (economic development agencies) loans available but many of these loans will require some sort of collateral.
Once a company has a product or service up and running and typically after revenue is being generated, many high tech or other scalable companies may pursue venture capital to expedite the growth and market share of their companies. Venture capitalists manage large funds and invest in multiple startups with the goal of getting a 5x or more return on their investment within three to five years. A venture capitalist, for example, may have a portfolio of 10 investment companies and expects 2-3 to fail, 2-3 to break even and two to three to be huge winners.
According to Jeff Nock, “Many entrepreneurs think they can get venture capital funding at the idea or pre-product launch phase and that may have been true back in the dot com era, but today venture capitalists want to see a product in the market that is working and can benefit from additional funding to scale and gain market share.”
Jeff Nock is passionate about helping people achieve their dreams by bringing new products and services to market that help the world be a better place.