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Probably the best analogy I can make to finding funding for your early stage startup would be to say that it\u2019s like writing an unfinished novel<\/a> . . . and, then finding someone to publish it. When you\u2019re seeking funding for an early stage company, in the vast majority of cases, your actual product is a work in progress<\/a> or even just an idea. Getting someone to pay you money based on a notion is incredibly difficult. In the case of the publishing world, it\u2019s hard enough to get a finished novel published; imagine pitching a suggestion. You need to work hard to exploit every opportunity; and, you must remain invested, even when you\u2019re having lots of dead-end conversations, and facing tons of rejection. This is not a project for the meek.<\/p>\nPerhaps that\u2019s why it makes sense for most entrepreneurs to start looking for money from those closest to them, in an initial round calling for a raise from initial investors labeled as \u2018friends, families and fools\u2019. If you\u2019re not prepared to ask people you know for money when you launch your legal technology startup, you may want to look for another line of work. \u2018Fools\u2019 is certainly a harsh term; but, it\u2019s also true that most new small businesses fail, many due to lack of capitalization. Investing in new businesses is like playing craps; more often than not, you\u2019re going to lose; but, the trick is to hit big often enough.<\/p>\n
Beyond those you already know, there may actually be people you don\u2019t know who will give you money to support your business. The first place most startups turn in this regard to is to so-called angel investors<\/a>, who are willing to offer capital to new businesses at a very early stage. Angel investors often congregate in groups, which offer busy investors an organized format to vet new companies. Angel investor groups will hold \u2018pitch\u2019 contests or provide entrepreneurs solo opportunities to pitch their product to well-placed investors. \u2018Pitching\u2019, depending on the format, can seem impersonal; but, it is an opportunity to acquire funding that startups should lean on. You can get good at it; and, some startup founders become so polished that they can keep their businesses running solely via acquiring funds through pitch competitions. It is true that many entrepreneurs become very, very good at raising capital, even if their companies don\u2019t ever generate truly meaningful revenue.<\/p>\n Incubators and accelerators are also popular options for founders, because these opportunities allow new companies to acquire funding, but also to gain expertise and experience by working with successful entrepreneurs in a structured, learning environment. This is especially helpful for entrepreneurs who are new to the business world. And, some accelerators, like Techstars<\/a>, have sterling reputations and can provide access to major league sources of capital and support.<\/p>\n Venture capital<\/a> funding is another option for new-stage startups. Venture capital funds are run by investment professionals, who are approached by and who actively seek out, intriguing startups with the potential to become worth a ton of money. This is when you get asked questions like, \u2018How do you become a $500 million company?\u2019 Hooking on with the right venture capital firm can be essential for a start-up, since these organization will not only provide funding, but also consistent and engaged support in building out a strong corporate structure and management protocol.<\/p>\n Of course, nobody\u2019s just going to give you money. It\u2019s like the Dire Straits song says<\/a>. And, the earlier you get investors, the more you give up: in terms of equity, in terms of quality. Anybody who says you should start your own business so you won\u2019t have a boss is full of shit: Small business owners have dozens of bosses (their clients) and big business owners have dozens of bosses (their investors and shareholders). So, that\u2019s the trade-off. But, for many, it is a far more appealing option than taking on credit card debt, or bank loans with collateral attached that can make you gulp.<\/p>\n Regardless of how you try to fund your startup, the watchword is hustle. You\u2019ve got to hustle like crazy to make that paper. And, the legal vertical is an especially hard sell. Savvy investors are wary of the legal industry because they know selling into law firms is difficult since lawyers are so cheap; and, even if you can make the sale, the sales cycle is long and expensive. Savvy investors also understand that businesses focused on the legal vertical typically are not as valuable as businesses focusing on other verticals.<\/p>\n That all being said, it\u2019s not impossible to get funding for a legal tech startup. Plenty of innovative companies have done it, with the right mix of team, traction and idea.<\/p>\n When you\u2019re ready to get started, make sure you\u2019ve built out a killer pitch deck<\/a>, and have a sensible financial model to present<\/a>.<\/p>\n This is not a project for the meek. . .<\/p>\n","protected":false},"author":73229,"featured_media":3460,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2974,2395],"tags":[3201,3277,3124,3262],"class_list":["post-6112","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal-technology","category-startup","tag-fundraising","tag-jared-correia","tag-legal-tech-startups","tag-tech-investment"],"acf":[],"yoast_head":"\n
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Jared D. Correia, Esq. is the CEO of\u00a0Red Cave Law Firm Consulting<\/a>, which offers subscription-based law firm business management consulting services for law firms, bar associations and corporations. Red Cave also works with legal vendor to develop programming and content. Jared is also the COO of\u00a0Gideon Software, Inc.<\/a>, which offers intelligent messaging and predictive analytics software built exclusively for law firms. A former practicing attorney, Jared has been providing services to lawyers and law firms for over a decade. He is a regular presenter at local, regional and national events, including\u00a0ABA TECHSHOW<\/a>. He regularly contributes to legal publications, including his column, \u2018Managing<\/a>,\u2019 for\u00a0Attorney at Work<\/a>, his \u2018Law Practice Confidential<\/a>\u2019 advice column for\u00a0Lawyerist<\/a>\u00a0and his column for\u00a0Above the Law<\/a>\u00a0focused on the legal technology startup community. Jared is is the host of the\u00a0Legal Toolkit<\/a>\u00a0podcast on\u00a0Legal Talk Network<\/a>. Jared also teaches for Concord Law School<\/a>,\u00a0Suffolk University Law School<\/a>,\u00a0Solo Practice University<\/a>\u00a0and\u00a0Becker College<\/a>. He loves\u00a0James Taylor<\/a>, but respects\u00a0Ron Swanson<\/a>; and,\u00a0he tries to sneak Rolos when no one is looking<\/a>.<\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"