Financing and funding comes in all shapes and sizes from all sorts of sources but word to the wise: look first to your customers/clients. This point was driven home over the last couple of days, since I heard first-hand of three companies getting their seed capital from their target audience.
Although seemingly obvious, this strategy is one of the absolute best ways to fund your company. Think about it. Your customers/clients actually know what the heck you are talking about with your busines, and their is no clearer vote of support than having your target audience pay you to build them a solution they need. What’s more, they may actually help you build your product/service by being the perfect guinea pig of a customer. In one of the cases that I heard this week, the founder was able to secure $900,000 from a single investor/customer. The long and short of their conversation was if you can build xyz, I will not only be your customer, but I will be your funding angel. Think about the time this founder saved by securing one mega-angel versus cobbling together bits and pieces from friends, family and doing the angel network rounds. I was certainly envious and I’m not even raising capital at the moment!
And just in case you’re thinking this is a new idea….it isn’t. It is simply the old idea of patronage updated to 21st century capitalist norms. So if your looking for money, look to your current circle of customers/clients to be your modern-day patron. Together, you may do great things.