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How to raise money for a tech startup

How to raise money for a tech startup?

Even though the economy and business world is always changing, the advice about how to give your startup the best chance of getting funding stays the same. Venture capitalists look for new businesses with unique value propositions and plan to grow, scale, and give investors a big return on their money.

If your long-term goal is to raise money, there has never been a better time to work on positioning your startup, whether you’re raising a seed round, a Series A round, or a Series B round. A recent report from Carta called 2020 found that between a seed round and a Series A raise, it takes an average of 22 months, and between a Series A raise and a Series B raise, it takes an average of 24 months. One thing is for sure: getting money takes a long time. But if you use these tips to set up your startup, you’re more likely to be successful sooner.

How to raise money for a tech startup?

1. Show what makes your business unique.

Disruptive” is a popular buzzword that sometimes seems hard to define and only seems to apply to “unicorns” like Airbnb or Uber. A “disruptive” company is just one that does something new and different. What do you do that no one else can? How will your new business make a difference in your field? Jason Humble runs Humble Capital Consulting as its CEO. His company checks out and invests in tech startups, and this disruption is the main thing that tells him if he should invest or not.

“Focus your pitch and value proposition on what everyone else isn’t doing,” said Humble. “How can you prove that your business will take over the market and hurt other businesses in your field?” Humble has invested more than $1 million in a number of tech companies. Right now, he has money invested in a company called Digital Air Technologies that does the same thing using automation technology.

He said, “Investors want to know that they are putting their money into unique companies.” “Always, the owner wins.” Instead of making money as you build your business, try to leave a legacy that will last. Instead of trying to be like other successful companies, your pitch should focus on what makes you different. In this case, being the black sheep is a good thing, because that’s what they want.

2. Use a wireframe to make a plan.

Some tech companies can’t start building their product until they have enough money. This is like putting the chicken before the egg. What’s much cheaper and more important for a pitch is to make a wireframe concept for your app or technology so you can show investors how it will work when it’s built. It’s not as good as having the technology already, but if you don’t, you have to do it.

You should show that your team has the knowledge and skills to build what you want, in addition to the wireframe. The same goes for this wireframe. Before it was done, Shopify was built on the web-application framework Ruby on Rails. This meant that the people who started the company could run it on their own for six years before they had to ask for money. There are a lot of tech tools that can help you get started as soon as possible.

The wireframe concept will also show that you have thought of everything needed to build the technology. This will make your request for a certain amount of money stronger and more based on facts. Investors want to know where their money is going and don’t want to be surprised. Use information about how you will actually build the thing to back up your wireframe.

How to raise money for a tech startup?

3. Prove you know how to use Bootstrap.

Investors don’t like risk, that much is certain. They are great at letting people know which companies are more risk-averse than others, but the more you can do to make investors feel like it’s a no-brainer to take a chance on you and your company, the better. So, show that you know how to start over! This proof could come from the work you or your founding team have done in the past or from the work you’ve been able to do so far without money. The better you are at managing money, the more investors think you are a good person.

Make a spreadsheet that shows how well you can bootstrap with financial projections. This is probably going to come down to who you know and what you can do for free. For instance, instead of giving $20,000 to marketing in the first quarter, who do you know in the world of publicity? Who can you work with to make a paid Instagram post? Michelle Phan, who started Ipsy, used her eight million YouTube subscribers to make her business profitable ($150 million in sales) with just a seed round before she went on to raise $100 million in a Series A. Bootstrapping isn’t just about being smart with your money; it’s also about showing that you have the tools you need to make your business work without giving it a lot of money.

Every startup’s path to funding is different, but it’s best to do as much as you can on your own before looking for investors. Remember that investors want to get on a rocket ship that already has enough fuel to break the earth’s stratosphere. You can go to the moon and beyond with their money, but first, you have to prove that you planned to go there on your own.


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