How do you get a nonprofit software company to invest in your business?
- by admin
Software companies can be notoriously hard to get funding for, as the traditional VC model has a tough time scaling, and the venture capital market is also not a great place to find non-traditional VC firms.
That leaves a lot of software startups to rely on the crowdfunding platforms of non-profits, which offer a lot more protection against regulatory and investor scrutiny.
But it’s not as simple as simply filling out a form.
While non-profit software startup founders have to set aside a portion of their startup budget for a non-charitable purpose, there are plenty of other ways to go about getting funding for your non-tech startup.1.
Fund the company with a startup that is already accredited or accredited by a non for-profit organization.
This will give you more protection from investor scrutiny and also allow you to raise money for your company that has already secured an accredited accreditation.
For example, a nonfor-profit that is an accredited business accrediting body may be able to help you raise money.2.
Donate your startup’s money to a non–profit organization or a charity.
This is the second best way to get money for non-technical startups, but you’re still likely going to run into issues with regulators and potential government intervention.
This strategy also means that you’re likely to face regulatory hurdles, including the requirement that the money be used for a charitable purpose.3.
Don’t make your non–tech startup dependent on a nonprofit.
A nonprofit has a lot to gain from investing in your startup, but it will probably also get a lot out of doing so.
That’s why nonprofits can invest in startups that they’ve already invested in.
For instance, nonprofits may be interested in helping a startup get accreditation from the nonprofit accreditors, which could help them find investors or even provide funding for a start-up in need.4.
Fund your nontech startup with a nonprofits stock.
You can also use your nonprofit stock to raise more funding for the non–technical startup.
For nonprofits that don’t own shares in a startup, there’s no limit to how much money you can raise from your nonprofits holdings.
For most nonprofits, they’ll also be able sell their shares to raise additional funding.5.
Choose a non‐profit for which to sell your nonfor–tech company stock.
This may sound like a no-brainer, but some non–profits may not want to sell their stock.
It may be better to use your stock to grow your nontechnical startup to more than a million users and to build a community of users and developers.
For many nonprofits these are the kinds of businesses that can’t be easily scaled to a million.
But there are some exceptions.
A couple of non–for–profits will offer some degree of stock ownership.
For the nonprofit that you’ve chosen, it’s a good idea to make sure that you have at least $500,000 of your non‐software startup stock to help fund your non technical startup.
If you have no money left over from selling your non for–tech stock, you can still take your non software startup to a more traditional non–federal securities regulator and apply for a “qualified securities prospectus” (a stock prospectus that will let the public see your company’s financials).
You can find more non-for–profit software startups and non–software startup investors on the Bricco Venture Network.
Software companies can be notoriously hard to get funding for, as the traditional VC model has a tough time scaling,…
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