What are the types of funding I should go after for my web startup?

Well, the first thing to think about when it comes to finding VCs and angel investors for your web startup is to ask yourself a few questions:

  • Who benefits from what my web startup offers? Write down your response.
  • How do they benefit? This is important because when you’re approaching investors of any sort (be it friends, family, VCs that you don’t know, or angel investors you don’t know), they want to know what they’re getting for their money. Make sure that you can answer questions related to profits, losses, costs, and your projections.
  • What makes you different from those who do what you do? The Internet has given people almost unlimited choices for anything that they need. What makes you so different that people will come to you?
  • What is your ideal client? Who are they? What industry are they in? What type of money do they make? Write out an ideal client profile.

The answers to those questions will help you learn more about your business, answer questions for investors, and could even help you identify potential investors. You want to find investors who are supportive of your industry and who can see the value in what you do.

The most common types of funding are:

  • AR lines (credit based)
  • Asset loans
  • SBA loans
  • Venture debt
  • Equity financing

Those aren’t the only types of funding. There are SAFE investments, convertible notes, and Keep It Simple Security docs (and other arrangements). Of course, like everyone else has touched on, you should bootstrap for as long as possible. Put everything that you can back into your business.

You mentioned terms and percentages. Ultimately, it’s up to you. You certainly don’t want terms that you can’t live with or that make you regret the deal. You certainly want to make sure that your percentages are fair to you and keeps you in majority control.

Make sure that any agreement that is proposed to you (or counter-offer) is reviewed by an attorney who is on your side and who will look out for your best interest. LawTrades is a legal marketplace. We provide startups just like yours with affordable access to attorneys. You can get the legal advice that you need regarding fundraising choices, terms, and have agreements reviewed for an affordable price. We also have a feature called Micro which allows you to ask a personalized question and you’ll receive a customized answer within 48 hours for a low flat rate. We’ve helped thousands of startups and we’d be happy to help you!