How do I get someone to sponsor me if I have a good idea and the commitment to follow it through.
I am a junior at George Washington Highschool and I am wondering how to get someone to sponsor an idea of mine, so I can start my business. #business #entrepreneurship #sponsorship #funding
Jared ChungCareerVillage.org Team
Jared’s Answer, CareerVillage.org Team
Ok this is a good question and I think I can answer it (I'm an entrepreneur -- someone who creates businesses). First off, you should edit your question to tell us more about your idea because every idea needs to be marketed differently. Not every business needs money to get off the ground, but if you think you need money to get your business started, there are a few options. Let's lay it out in terms of various answers to the question "Who would give me money and why?"
Option 1: Investors will give you money to get money back later
This can get complicated, and if you want to do this I recommend you ask another question specifically about this topic. But to get you started, you need to know that there are many many types of investors and they're all named for how they invest. For example "Angel investors" give money to very small ventures (maybe like yours). "Venture Capitalists" give money to high-growth companies that are at an early stage (but typically not as early as angels). "Private Equity" investors will invest in large businesses that have matured and been around for a long time. There are many others. All of these investors are competing with each other to get as much financial "return" as possible (earning more money back than what they put in). Again, it can be complicated but there are generally two types of investments: debt (a "loan" that you promise to pay back at a certain date with some interest) or equity (an ownership stake in the company that gives the equity owner a share of future profits or a share of the sale price if you sell the company in the future). But watch out here because there's a ton of variability in how investments are structured and getting a lawyer is an absolute must for this kind of thing. To convince investors to invest, you need to contact them, pitch them, and show them that you have a really thorough plan and have the ability to succeed. Before they give you money they'll want to feel that they are likely to get a great return, so you should definitely practice your pitch a lot and practice answering very challenging tough questions with other people you know.
Option 2: Customers will give you money to buy your product
This is my favorite. If you want to start a business, try to get your customers to give you the money you need to start it by selling from Day 1. Sometimes you may not even have the product build yet, but if you can sell it without a prototype, you can generate the money you need to build it out. Kickstarter or Indiegogo are classic examples of this: people sell products there before they're built, and that gives them the money they need to build the products and (hopefully) generate a profit that will allow them to jumpstart the business so it can continue.
Option 3: Prizes and awards from entrepreneurship organizations or foundations
There are a ton of competitions and prize programs designed to promote entrepreneurship in general, entrepreneurship for youth, entrepreneurs of certain demographic backgrounds (sometimes race or ethnicity, sometimes nationality, sometimes age, and so on). If you find one that you think you qualify for, you might try to enter into the competition to win funding. For example, I won money through participation in the MassChallenge program that I used to grow CareerVillage when it was small.
Option 4: The government
The government is very interested in promoting small business development and entrepreneurship for one very simple reason: new businesses create new jobs, which creates new demand for talent, which enables more people to work, and when people work they are happier and more prosperous. So the government will often provide either grants (free money no strings attached) or low-cost money (such as a loan with a very low interest rate) if you apply and compete for the funds. Depending on your location you might end up with a different set of options: sometimes federal, sometimes state, sometimes local.
Ask yourself the question "what type of person might want me to succeed, and why?" and if you can think of anyone whose interests are aligned with yours, they could be a potential person who would give you money. Then look at that list and ask yourself who there has money, and who you might be able to reach. That's a potential investor!
I hope that's helpful. Tell us more about your business sometime so we can help out even more!
The most obvious source of funds at your age probably comes from family.
But if you’re seeking funding elsewhere, remember there’s no thing as a “sponsor”. A sponsor implies a benefactor who’s doing it out of charity.
In business (and almost everything you do), you need to defer to another person’s sense of self-interest. What do they get if they invest in you? In other words, it’s not about what you want, but what they want.
Life may be chaotic and unpredictable. But you can always bet that people are likeliest to act when they have something to gain
G. Mark’s Answer
You need to create a business plan. This is a document that describes what problem you're solving, who the target users or customers will be, why it's important to solve and your planned approach. This last part is where you begin to describe what your team will look like and what your milestones are expected to be. As you flesh this out, you should build a team of people -- possibly just yourself, but likely not -- who have skills, knowledge and credibility that would convince people you're serious you can succeed, and you have enough support. You get "sponsorship" -- i. e., funding -- by convincing others to provide funding. These others could be "angel investors" -- people who will provide funding to influence your endeavor, venture capitalists -- people who make a business supporting the funding of other businesses, and friends or family who would like to be part of your project. It's very helpful to look for people involved in the business you want to go into. Trade shows, on-line forums, group funding pages, look for advertisements for venture capitalists or companies advertising that they want to support inventions or business ideas for a part of the business. Trying to sell your idea is a great way to test it for faults and improve it if possible. Think of this as a learning adventure that will allow you to hone your project for eventual success. Talk to as many people as possible. If you're attempting a new idea, be sure to get them to sign a Non-Disclosure Agreement (NDA). And go for it.
Jared certainly gave a lot of perspective and good options. I have come to believe that great ideas are not valuable by themselves. However, when combined with persistence and determination they become valuable. I highly recommend watching the TV show Shark Tank, where people ask for money for products. You can definitely get an idea for what investors are looking for. In short, they want to see the product and understand the value it provides. They want to see that customers like it and are willing to pay for the product by proof of sales. In order to get investment, you need to have at least a working prototype built. You'll also need evidence that customers will buy the product. If you are persistent and determined you can accomplish these first steps without the need for investment. Once you have those things, you will be in a position to ask for some investment.
Ask yourself, if I had lots of money what would I need to be presented with in order to invest in someones idea?
For example, lets say Person A claims that they are going to make a new kind of cake that everyone will love. All they need is $10,000 to open up a shop to start baking and selling, and then they will pay you back.
Lets say Person B also claims that they are going to make a new kind of cake that everyone will love and then gives you a piece to try. You love it. Then, they explain how they have been selling these cakes to a local coffee shop that keeps asking for more because they are selling so fast.
Which person is more likely to get your investment?
G. Mark’s Answer
There are several detailed answers to this question, but I'd like to take the approach of a summary you can use immediately. Regardless of who you work with, who funds you or what your business or its needs are, you need a business plan. If you are funded by family, friends, venture capitalists, angel investors or the government, you need this. It's a document or presentation you write that simply describes the problem you're solving, why it's important, what your approach is, who and what you need, why this is a good time to do it. and what your target market is. If you can do that, you're on your way. If not, either work on it until you come up with those things, or realize you should try something else. This is, as they say, "Job One." Currently, I've written a business plan for a new robotics proposal. Writing it was not only fun, even if laborious, but very educational. It forced me to learn more about what the industry was up to at the moment. And it gave me some invaluable insights into what others were doing.