How to evolve your products 🌱
Evolving you product through gradual changes
From series funding and crowdfunding to bootstrapping - how do all of these work?
In Episode 8 of Season 1, Chris Geary goes through his journey building BSD Education, which offers EdTech solutions to educators and school institutions, to integrate coding into subjects and equip kids with tech skills.
Chris explains how they’ve gone through several fundraising rounds, and the challenges of doing so for businesses that focus less on profit, and more on impact. As their business model focuses on schools, both public and private, which can have limited budgets, they grew through Series funding, as well as making use of some loans/personal savings.
There are many ways of funding your startup, and not one is a “one size fits all” approach. So we wanted to break down the different fundraising strategies you can also use for the growth of your company:
Series funding is when startups raise rounds of funds, with each one being higher than the previous. These can be seed, Series A, B, C, D and E:
This is the very first type of funding you will have raised. Seed funding is used to take your ideas to the first steps in product development or market research. These can be raised from friends, families, angel investors (most common for this stage) and venture capital firms that focus on early-stage startups.
Once a startup has gone through seed stage and have some traction, they’re ready for a Series A round. These can usually come from venture capital firms, with angel investors who may also be involved. Startups also usually utilize equity crowdfunding during this stage.
This is for when you’ve found your product/market fit and need help expanding. Questions here would usually round to “Can you scale your current business model? Can you go from 10 users, to 100, to 1000? Series B funding usually come from venture capital firms or the same investors as Series A.
Startups that make it to C stage are usually doing very well and are ready to expand to more markets or develop new products. It is often the last round a startup raises, as a final push for its IPO or acquisition. Validation then in this stage, is based on harder data points and key performance metrics - number of customers, revenue generated, company current and projected growth rate, etc.
Startups usually end funding in Series C, but In case of needing more expansion opportunities or having a down round (when you don’t meet expectations of the last round), Series D and even E is created.
Crowdfunding literally means that - funding from a crowd, which can include your friends, families, customers and individual investors. You’ll need to tap into a large pool of people, through i.e. social media, emailing and just WhatsApp messages, and find people who are willing to believe and invest in your startup. This helps you broaden your reach, rather than just focused on wealthy firms or individuals.
A few of the most popular crowdfunding platforms include Kickstarter, GoFundMe and Indiegogo.
Most startups get off the ground with initial small business startup loans they’ve applied for. These can usually include bank loans, credit card loans, or even loans from families and friends. When applying for them, be wary of high interest rates - ensure your company can pay the loans back in the given time.
Venture capital is funding for startups and small businesses usually of higher risk, but also have potential for crazy growth. The investments are fairly large, with the goals of venture capital investment being high returns, usually in forms of equity, acquisition or an IPO.
Angel investors are usually high net-worth persons who look to support startups from providing a few thousand dollars to millions of it. They make their own investment decisions without having to manage a partnership or corporate organization, which makes it a smoother experience than when dealing with Venture Capitalists. Angels are also one of the most accessible ways for startups to raise funding!
Of course, you can also choose to use your own savings to fund your startup - you won’t always need to find other individuals or groups that can. If given the possibility, this is the best way for your startup if you want to preserve equity and decision making for your startup. But know when you do need support, and only accept help when you’ve done your due diligence.
Every startup needs funding to run and operate, and there are many ways you can obtain it, particularly through Series funding, crowdfunding, loans, venture capital and angel investors. Take a good look at where your startup is, and which funding strategies would fit it best.
💛 Think about whether you really care about the idea you’re launching. People will talk - you need to believe in it and fight for it.
💸 Don’t worry about the money. Not to be reckless, but do what you can and find others who do have the resources who can support you.
🥊 Be prepared psychologically. You’ll hit really low lows and big risks.
I've been helping entrepreneurs, intrapreneurs and innovators build their tech products since 2016!
Bringing outstanding products to life is not easy. But despite that, it's an amazing journey for anyone who wants to innovate, make a change or an impact in any industry.
So I wanted to get on the mic, meet with amazing founders/makers, and share all of their crazy journeys and experiences with you. I hope it educates, inspires and entertains you. Enjoy! ;)
Morgan is the Co-Founder & CEO of Sparkmate. They've built 100+ high-tech products and ventures to solve tomorrow's challenges!