The general thought about raising funds is that the founder has to be sufficiently impressed before he can raise funds. Most founders think you need to have an excellent product that already has market acceptability. Some others think it is impossible to raise funds if you do not have a credit score, financial records, or tangible assets. Nothing could be farther from the truth.
I recently prepared a course on a reverse funding strategy for startup founders, and the course summarizes that you can raise funds for your business, from day 1. Yes, it is possible to raise funds from your business even without any credit score, financial records, or tangible assets.
To access funds from day 1 of your business, you are trying to get your investors to believe that the business will be worth their money even though you have not even gotten the product into the market. Product or no product, the first thing you want your investors to know is that you have access to demands.
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Demand here is the number of goods that customers are willing and able to buy, and for you to use the reverse funding strategy, you need to be able to harness the demand. You should create a market, or at least establish before potential investors that you have a market for the product, and use that market to raise money.
Another thing that will be very important for you if you are trying to raise funds from day 1 is your brand and network. You need to have a good brand online and offline. Also, have a good social network and network with the right people.
Let people who need your product know what you are doing (this is part of your market demand by the way). Offline, get to relate and associate with people that matter in your industry. Identify the clusters where the demand for the product or solution you have is. Use the relationship and brand visibility you have built to communicate with them. Get your demand to a point where you can convert it to a financial instrument.
You are also going to need a lot of goodwill and this comes from networking with the right circle. Being able to convince the financier that you have the capability and capacity to deliver the service or product, is a function of the brand you have built online and offline. Every post, every interaction, every engagement online matters and is part of your brand. As you veer further into the waters of entrepreneurship, you will come to see that in fact, your reputation and brand is the first basis on which your business proposition will be considered before it gets a reputation of its own.
If the startup has been around for some months, it is also helpful if you have delivered a product that matches your customer needs and is already being adopted at a steadily increasing rate. It does not matter how small the growth is, provided that it is steady. Say for instance, if your customer, client, or users are increasing by 5% weekly consistently for more than 12 weeks. This is impressive, if for nothing else, for its consistency.
If your startup has had some months of operation before you seek to raise the funds, a big plus on your side would be a possible contract or partnership with established and big brands. For instance, if you are about to, or have just launched your solution and can get an established brand to join your waiting list or your first customers, you will enjoy some stretch of their reputation. This in itself can become a financial instrument.
There are more details of this funding strategy in the course.