You may have the best business idea in the world, but you will need funding in your early stages of growth to get your business off the ground. Projects that are too small to gain support from mainstream venture capital firms can be linked to a group of investors willing to take a chance on your project through Micro Funding. Micro Funding allows you, as an entrepreneur, to network with investors and managers to grow your business to the next level. Your good idea combined with micro venture capital and good management can provide your start-up with accountability, shared responsibility, and cash.
In a TechCrunch article in May 2010, MG Siegler writes,
THE NEW YORK TIMES PROFILED THE NY-BASED PROJECT YESTERDAY, NOTING THAT THE TEAM OF FOUR NYU STUDENTS GAVE THEMSELVES 39 DAYS TO RAISE $10,000 THROUGH THE ONLINE FUNDRASING SITE, KICKSTARTER. AS NYT NOTES, THEY SHOT PAST THAT GOAL IN A MERE 12 DAYS. AS OF YESTERDAY AFTERNOON, THEY WERE AT $23,676 IN FUNDING. TODAY, JUST ONE DAY LATER, THAT TOTAL STANDS AT AN AMAZING $58,315. AND THEY STILL HAVE 20 DAYS OF FUNDRAISING TO GO.
The concept of Micro Funding is a three-way process accessed through various Introducer websites:
INVENTORS post their ideas confidentially and securely. They keep a large stake in the business without a commitment to growing or managing future business. Even if they have little entrepreneurial experience, they can raise funding and gain exposure for their ideas.
MANAGERS have secure access to these ideas. They select the ideas they believe have the greatest profit-making potential, with strict confidentiality, and grow the business.
INVESTORS securely and confidentially access ideas pre-selected by managers, and choose the projects they’d like to back financially. Not only are they backing the idea, but also the skills of the manager, making their likelihood of achieving a profit greater.
Social networking sites such as LinkedIn and Facebook have made connecting to Micro Funding sites easier. You can raise money and grow your business by accessing your existing social networks. Micro Funding is a way for you to raise funds while possibly avoiding bank loans, credit card debt, or asking family members for help. You can pitch your idea to your social network and ask for a small investment from each person. If you have a goal and invite your friends to invest, with incentives of discounts or a trial of your product when you are a solid business, and they invite their friends, you can meet your investment goal in a short period of time. For example, if you set a goal of $50,000 and ask 50 friends to contribute $100 each, and those friends ask 50 of their friends to contribute, you’ve spread the word to 2,500 people. If even one out of five of those people contribute the $100, you will reach your goal.
Obtaining Micro Funding can be like winning the lottery. It is a wonderful way to raise much needed capital for your start-up quickly. However, you should be cautious when disclosing your ideas to anyone who is not obligated to observe confidentiality agreements, or your idea could end up being worth nothing.
Micro Funding helps you expose your ideas to a lot of potential investors. As an inventor, you are freed up to continue working on new inventions while your ideas that have been picked up by managers are perfected and marketed. Investors seek the opinions of proven managers to lower their investment risks. Micro Funding can put you on the road to developing your product so you can present it in a demo stage to obtain greater funding to build your business and be successful. Micro Funding can be your stepping stone toward your next round of funding with angel investors and venture capitalists.