How to Get Funding for Startups

Updated: Sep 14

Taking you from idea to acquisition.


In the article below, we've provided an overview of the startup journey of raising capital. We have also created a free infographic to make the information easily digestible.



Take me straight to the infographic >>






Good news: all you need to embark on your startup journey is an idea, or IP that you’d like to commercialize, to solve a problem. And be completely devoted to solving that problem.


Additionally, we recommend you come into the process with an entrepreneurial mindset. What does this entail? According to Hayden Blackburn, Executive Director at TechFW, the entrepreneurial mindset is made up of the following components:


  1. Maturity - Ensure that your mental and emotional states are in a good place

  2. Lifetime learner - Maintain a limitless but guided thirst for knowledge

  3. A willingness to validate - If anything feels like an assumption…it is. With this comes humility - a chance that you could be wrong.

  4. Big picture thinker - A commitment to set aside dedicated time daily to get out of the weeds.

  5. Don’t go alone - Build community who you trust to poke holes and find blind spots

  6. Big listener - Listen to potential customers, current customers, former customers, staff, partners… everyone.

  7. Measure what matters - Know your key performance indicators (KPIs)​ and don’t get lost in everything else.

  8. Just do it - Remember the moment you first took action and self-identified as an entrepreneur? Good. Now, repeat that every day.

  9. Forward-thinking - Plan to scale. capacity-building can reap big rewards when you do it before it is even needed

  10. Delegate effectively - Hand it to the people smarter than you

  11. Eliminate Silos - They create in-fighting and deter cross-departmental work

  12. Become an idea machine - Flex this muscle on the regular

  13. Care about self-care - Build a self-care plan before you start your entrepreneurial journey


Don’t panic if you don’t possess some of these characteristics. Start with a new one and start building them over time into your daily and weekly habits.


Ok so you have your idea and your mindset, but how will you fuel your idea into reality? Well, get ready, because you as a founder will need to put in a lot of sweat equity and you’ll need to get really adept at bootstrapping. It is around this time that you’ll decide if you want a co-founder and start building a team. It would also behoove you to find an entrepreneur support organization, like an accelerator.




Join a Startup Accelerator


Non-Seed Accelerators


Non-Seed Accelerators have a competitive application process, have mandatory attendance and include a culminating event at the end of the program. Pre-accelerator participants are accepted into the 3-6 month program in a cohort that is very similar to seed accelerators.


Make sure to choose your non-seed accelerator wisely, as this is where you will formulate and test your business model, decide if there’s a market for your business and put a team together.


Check out our ThinkLab startup accelerator >>



Seed Accelerators


Seed accelerators have a highly-competitive application process and will invest equity capital in selected companies. Accelerator programs are typically short-term, ranging from 3-6 months. They accept companies in cohorts and provide learning opportunities and intense mentoring to each company, with a culminating graduation event at the end of the program where companies are able to pitch their concept or product in front of investors and other key stakeholders. Space is usually provided to companies for the duration of the program, although some seed accelerators run cohorts virtually with required attendance at educational or networking events.



Viable Business Model? Great! Now we can talk startup funding rounds.


The promise of big, easy and fast money to build business ideas has inspired countless entrepreneurs to throw their hats in the ring to try and make their dreams a reality. Funding rounds are widely known, but what isn’t known is the pits that you can fall into along the process. In this article, we hope to explain funding rounds as well as shed light on these potential pitfalls.



What is a Funding Round?


Funding for startups is not ‘one-and-done’. In fact, the number of times startups are going back to the market to raise more capital has been growing. Each of these capital raises is known as a ‘funding round’.


Each round is designed to give entrepreneurs and their businesses enough capital to get to the next key milestone or stage. This ‘runway’ between rounds can be as short as 12 months or as long as 6 months.


At each round, founders are looking to trade equity in their company for capital they can use to level up. Convertible notes are also often used in earlier series of fundraising when investors face more risk or in the event founders need a bridge round to extend their existing runway to get to the next financing round if there is not enough traction to do an equity round.




How Do Funding Rounds Work?


The process of raising funding in each round typically includes the following steps. There may be exceptions if startups receive unsolicited inbound offers, or if an auction-type situation is established. Many entrepreneurs find it beneficial to recruit the help of investment bankers and fundraising consultants to help them in this process.


Steps involved in fundraising rounds:

  1. Gather your data

  2. Research investors

  3. Create a winning pitch deck and hone presentation

  4. Attend investor meetings and pitch

  5. Relationship building

  6. Field term sheets and offers

  7. Survive due diligence

  8. Close the round with wire transfers and executing the paperwork


One skill that entrepreneurs must master if they want to succeed is this: storytelling. For the most part, investors are not investing in your past or your present. They are investing in your future… your vision and your confidence in it. For this reason, having a pitch deck that conveys where you are coming from and where you are heading with your business is critical.



Non-Dilutive Funding


Non-dilutive funding refers to any capital a business owner receives that doesn’t require them to give up equity or ownership. In other words, any chance you have to secure this type of funding, take it! You should seek to exhaust all possibilities of non-dilutive funding before giving away a piece of your company.


Contributions from donors, tax credit programs, vouchers, grants, competitions, and even family constitute forms of non-dilutive capital. Non-dilutive funding is often considered most helpful during the establishment of a company, yet businesses of all sizes rely on it at different stages of growth. Some grants, especially in biotech, are sizable and given further down the road after FDA approval or something of the like.

One example of a common startup grant is the SBIR (Small Business Innovation Research) grant. Each year, 12 federal agencies set aside a minimum of $3.2 billion for SBIR grants to fund research and development (R&D) to support their missions. The program provides grants ranging from $50,000 to $750,000 for up to two years.

Another type of startup grant is the STTR (Small Business Technology Transfer) grant. STTR grants are awarded to small businesses conducting R&D in partnership with a nonprofit research institution such as a university. STTR grants are awarded by five federal agencies: the Department of Defense (DOD), Department of Education (ED), Department of Health and Human Services (HHS), National Aeronautics and Space Administration (NASA), and National Science Foundation (NSF).

In non-dilutive funding, even though the founder doesn’t relinquish any shares, it isn’t exactly free money with no strings attached. Similar to how some loans accrue interest, specific grants can incur additional restrictions, oversight or other organizational costs.


Pre-Seed


Pre-seed is the first real stage of capitalization for a startup. It is often referred to as the ‘friends and family’ round. It will also include an initial investment from you as the founder, often referred to as your ‘skin in the game.’


Crowdfunding campaigns are frequently tapped into at this stage. They are a way for small businesses or startups to raise money in exchange for equity, rewards, debt, or sometimes, nothing at all. Business crowdfunding can provide you with fast access to cash, but it requires a strong promotional strategy, increased transparency and the possibility of giving up a piece of your business.


Crowdfunding your next business venture can be a fast and relatively easy way to raise money. However, you should know which type of crowdfunding is best for your business and what it requires.


Here are the most common types of business crowdfunding:

  • Equity crowdfunding: The most traditional type of funding in this list is equity crowdfunding. You sell a piece of your business to an investor or groups of investors and they provide you with the funding (capital) to move your business forward.