Entrepreneurs Getting Creative for Funding
In this day and age, when unemployment rates are at a high, more and more people are taking matters into their own hands and becoming entrepreneurs. Before one can open up their own business however, one naturally needs to find investors.
Let’s take Mr. Sean Conway, creator of www.notehall.com, an online marketplace for students to buy and sell class notes, as an example. Unfortunately a year into his venture he had run out of money and was unable to find investors willing to bail him out. “I had invested my life savings and I knew there was no turning back,” he said.
After the relatively modest amount of $17,000 given to him by his grandfather, he was able to get 8, 000 users at his alma mater, the University of Arizona, but that was not enough.
He submitted a request for help from the company DreamIt Ventures, a venture capital firm specializing in incubation and seed investments, and walked away with about $500,000 in investments. They generally invest between $10,000 and $30,000 in each company.
After his success with DreamIT ventures, Conway went on the ABC show SharkTank, a reality show that gives entrepreneurs the chance to pitch to potential investors, and went away with an additional $90,000 after agreeing to give up a 25% equity stake.
“In this economy, entrepreneurs need to work even harder and put more effort into thinking outside the box,” says Bo Fishback, vice president of entrepreneurship at the Kauffman Foundation. “Smarter entrepreneurs are looking to put more sweat equity into the company, not magic $100 bills.”