May 25, 2011
I gave a talk on entrepreneurship for students at Polytechnique Montreal today and the topic of seed money came up. Seed money are those few dollars needed to pay a lawyer, establish your initial network, find a business model and do all those other things needed to actually raise an initial investment round (and maybe even splurge on some food while you are doing this). Here are some tips to make it through this stage of the entrepreneurial process:
Grants: Universities are awash with grant program, bursaries, research funding and awards. A decent university entrepreneur ought to cover initial research cost with academic grants (if you can’t convince academic reviewers then the venture financing route will be very painful…). Other programs can cover your basic survival needs (i.e. food). Volume is key for these programs. Try to apply for something every week.
Frugality: It’s amazing how much money and time you can squeeze out of today’s student lifestyle. I meet countless students who bemoan their lack of funds while toting multiple subscription i-somethings in their designer jacket. Get real. If money is a barrier then strip away all the conveniences of our luxury society: no parties (unless you get free food), no booze, nothing that has a subscription (cell phones, TV, Netflix, newspapers, etc.), shared living, no car, nothing but used goods, etc. Doing so can significantly extend the initial runway of your venture and thus its chances of success. And if this sounds like an unpleasant lifestyle, keep in mind that you are doing it to fuel your million dollar opportunity while lots of people on the planet are doing the same just to survive.
Hustle: If all else fails, you simply need to get out there and make some cash. As a foreigner I was cut off from most university grants and my otherwise ultra-frugal lifestyle included $20k/year in incompressible tuition. Cash generation is essential under those conditions but avoid getting stuck in it. Try to find opportunities that can run in parallel to your main venture (and/or education). In my case, I set up a scripted brokerage system for this brand-new “Ebay” thing: My system would purchase auctions with bad headings (e.g. “Collection for Sale”) and then instantly re-list with keywords pulled from the main text (e.g. “17 Beanie Babies”). First seller ships to second buyer and the delta funded my life.
Whatever you do, keep your eyes firmly locked on the primary entrepreneurial goal. Seed money has only one purpose: get you to the point of having partners, business model and funding. Every dollar or minute spent on anything but the pursuit of those goals will be wasted. Sound like too much single-minded hustling? Well, it’s only good training for your future start-up!