Raising Funds Through Loved Ones for your Start-Up

There are many avenues to take when trying to raise capital to launch your start-up, develop a product, or even grow an existing business. We’ll focus on the pre-seed round. This round is typically designated for any funding done at the very beginning stage of your start-up. At this stage, you haven’t received any capital from outside investors. You need the money to get started, your savings aren’t enough, and you’re connected to loved ones with financial means.

Raising money through family and friends

Never ask for money from family members or friends who cannot afford to lose the money they lend you. Often times, start-up founders are told to get capital from loved ones, but the truth is, not everyone is born into or connected to a family with financial means. It’s not always realistic or possible to collect money from parents, siblings, extended family, or friends. BUT, if you are surrounded by loved ones who are in a position to assist you financially, start here first. This method of fundraising is called the Family and Friends round. It’s highly encouraged for founders at the very early stage of their start-up.

An early investor in your business or start-up idea is investing in you. They’re investing in your ability to complete what it is you set out to do. They’re investing in your drive, determination, and persistence to make your idea a success. They’re also investing with the understanding that the first sum of money they lend you will most likely never be returned to them, but they’re okay with that because they believe that future rounds will generate more return on their investment (ROI).

Best Practices

  • Always come prepared with a written, formal agreement when accepting the money
  • When applicable, provide a detailed repayment plan to your donors
  • Determine the investment type: gift, loan, equity
  • Have your product or idea validated before approaching your loved ones for donations
  • Do not ask for more money than a loved one can reasonably afford
  • Focus on loved ones with financial means and knowledge in your business industry
    This is to strategically position you around connections that can be of help long-term
  • Be honest and upfront about your business plan, risks, and expectations
  • The standard ask for a family round is around $25,000 to $150,000 in total
    Expect small and large donations from various family members to reach your total goal

Get Rid of Your Fear of Asking: it’s not easy approaching those you love and care about to ask for money. We want you to realize that if you genuinely believe in your idea so wholeheartedly that you’ll do everything in your power to make it a success, then you’re doing your loved ones a favor. Realize that your success is their success if they’re the first investors. Should your company turn out to be a fast-growing business with a great buyout or ends up publicly traded, your loved ones will thank you for gaining in your profit.

Get Organized and Just Do It: don’t wait for the perfect moment or opportunity to ask your loved ones for money. As soon as you’re prepared to do the asking, just do it. Make a list of all family and friends who you know can afford to invest in your business. Gather their contact information and organize your calendar to ask those who can donate in large and small amounts. Mix in a large ask with a small ask to balance out the fear of failing. Reach out to them confidently, with a mindset that’s determined to fundraise your total goal. You are now a salesperson and you’re selling your future. Your faith rests on how well you convince them that not only are you creating a better future for yourself, but you’re creating one for them too.

 

 

 

My Choice to Become a Black Female Immigrant Entrepreneur

WHY I STARTED MY COMPANY
By Elise Woappi

I was 10 when I got on a plane two weeks after 9/11, with two suitcases, to immigrate to America from Cameroon, Africa. My parents had won the United States Green Card Lottery, which meant that we were one very lucky family that was permitted to move to the United States with the support of the government. All we had to do was obey the law, respect the country, and commit 6 to 7 years as green card citizens and we would become U.S. citizens.

Our immigration to the states was one of the toughest moments of my life. I remember feeling so helpless and vulnerable as I navigated racism, puberty, and the aftermath of 9/11 as a young immigrant. We moved to a small town in Pennsylvania called Hanover. I have very fond memories of my experience growing up there, the church community that embraced us when we arrived, the African community in surrounding towns that took us under their wings, classmates that were both intrigued and fearful of my culture and background. I also have negative memories of my experience dealing with racism. An experience I first encountered once we moved to the states. Being black in Cameroon isn’t an issue, but being black in America is – at least that’s what I was conditioned to believe. I recall my first time being called the N-word by two white young adult men driving by as I stood outside the Hanover Public Library in 2004, my mother’s first employer in the states. I recall being in history class in middle school as the teacher and students debated my African culture. I recall feeling less than as I tried to make friends and talk to boys in a 99.9% predominantly white town. At that age, I didn’t quite understand just how much my parents had sacrificed to give us the American quality of life. I didn’t understand it until I was 22. Not until I graduated Penn State with a Bachelor of Arts degree and stepped out into the real world with student loans, a poor job market, and a death in the immediate family.

My father passed away when I was 19. To this day, his death has been the biggest emotional trauma I’ve undergone. I think the guilt and frustration of knowing just how much he scarified to provide for his family only to be met by cancer as his death verdict, has been too much to bear at times. If I had to summarize in one sentence what motivated me to build my business, I would simply say, “because I get to live a great life at the sacrifice of my parents’.” Uprooting their lives to a new country, moving to a new location with no financial backing and exposure to racism, all while having to start over completely as immigrants with children, was one of the greatest sacrifices my parents made. I simply want to pay them back, and to do so in a way that not only commemorates my father, but spreads the legacy of my parents’ sacrifice.

My childhood goal wasn’t to become an entrepreneur. I grew up wanting to volunteer, spread joy to the world, and help people. I was never set on one passion; rather, I just wanted to help in any way I could. My first year out of college, I decided to become an AmeriCorps VISTA in San Antonio, Texas. I committed to the program for a year and learned as much as I could about the nonprofit world. After that, I realized that volunteering barely paid the bills and I needed to find a well-paying job. I embarked on a 4-year journey of working at various nonprofits, institutions, and businesses. At each one, I made sure to specialize my skills in development, fundraising, marketing, research, and technology to stay ahead of the curve. Four years into my professional career, I decided that I was seeking something greater.

Don’t get me wrong, I am a hard worker and always exceed expectations. Matter of fact, I was always viewed as an amazing employee and my former bosses and colleagues were devastated to see me go. Truth is, I wanted to build something on my own due to years of watching my parents struggle and work tirelessly to provide for my family. I had this chip on my shoulder to create for myself. To work for myself. To build for myself. For months, I wondered why that chip was so big on my shoulders. Then a year into my last employer, I realized that I wanted to create something tangible to implant in the United States. My family moved to the states with nothing but suitcases and each other. We grew up in this country whose history did not include the Woappi family. My amazing father lived an empowering life but died at 53 and the majority of the American public never got to know him. My wonderful mother has lived and executed such a powerful life, and for the remainder of her time on this earth, I want the world to get to know her.

I launched my business in August 2017 not only to provide value to millions of individuals and businesses around the world, but to create a legacy that embodies the struggle, sacrifices, and hard work of what it means to be a black, female immigrant trying to make it in the United States. This is my story to share, a story that I hope serves as inspiration for underrepresented groups, individuals struggling with sexism, racism, and homophobia. Let my journey empower you and find the strength within to push through.

Thank you to:
Christ Woappi (dad)
Annie-Laure Woappi (mom)
Loic Woappi (brother)
Yvon Woappi (brother)
Anne-Elise Woappi (twin sister)