Journalism skills and a good idea are essential for bringing your media startup to life — but they don’t entitle you to financial support from a foundation or an investment from a venture-capital firm.
“Assuming that you can get funding because you have journalism skills and an idea is not very persuasive in this particular environment,” said Jan Schaffer, executive director of J-Lab, which funds entrepreneurial projects. Instead, she said in a phone interview, media entrepreneurs have to prove to investors and grant providers why they and their idea are worth it.
So how do you prove that? Here are eight tips:
1. Partner up
Being a jack of all trades and master of none isn’t the best way for journalists to approach entrepreneurship. Instead, media entrepreneurs should build a multidisciplinary team that’s capable of accomplishing their goals, said Corey Ford, CEO of Matter, a startup accelerator and early-stage venture-capital firm that invests in media ventures.
“One or two journalists working together to build something usually leaves a big hole in the team,” Ford told me over the phone. To fill that hole, find developers, business people and others whose skills complement those of the journalists.
“Multidisciplinary teams are going to be more successful,” he said.
2. Know your customers
Aspiring media ventures and entrepreneurs should work to identify their consumers early in the process and ensure that their proposed products are in line with what those consumers want or need.
“You really need to be able to describe the specific customer you’re designing for,” Ford said. He also recommends testing ideas out on potential consumers to see how viable they are in the real world.
“You’ve got to validate your ideas,” Ford said. “Get them out of your head and in front of people.”
3. Figure out your business model
Whatever your idea is, you need a viable strategy for keeping it alive. “You’ve got to figure out how you’re going to take your idea and turn it into a business,” Schaffer said. “Often, that doesn’t receive enough consideration.”
4. Find a good fit
Part of finding funding for your media startup is deciding which investors are the right ones to pitch. “Like any good story, you need to know who your audience is,” Ford said.
Before seeking funding, Ford suggests determining your business goals and finding sources of funding that have similar goals. For example, a business with high growth potential may be more successful seeking venture-capital funding, while a proposed non-profit would do better going after foundation-funded grants.
“Before you raise money, know who you’re trying to raise money from and whether your team goals align with that firm’s goals,” Ford said. “You don’t want investors who are a mismatch to what you want to accomplish.”
5. Show don’t tell
Making a strong pitch on paper may not be enough to win over potential donors. Creating a prototype that shows what you plan to do with a donor’s financing can be more persuasive.
“We find it a lot easier to fund projects when you can see what the vision is,” Schaffer said. She suggested budding entrepreneurs consider launching proof-of-concept projects or websites to help donors see what they’re pitching.
“Once you have that proof of concept, it’s a little easier to raise funding,” she said, noting web entrepreneurs can often launch such sites “with a little bootstrapping and sweat equity.”
6. Do your homework
Schaffer said she’s astonished by the number of applicants who apply for funding without having done proper research.
Media entrepreneurs have to pay attention to what kinds of projects foundations fund and make sure their projects fall within those foundations’ guidelines. She noted that getting considered for funding requires both a strong presentation and an idea that fits the foundation’s current call for proposals.
Schaffer also suggested surveying the competition, obtaining necessary web domains and trademarks and ensuring your team is eligible for programs.
Several organizations already are in place to help with that process. “The reason why we exist is to help foster new organizations,” said Kevin Davis, CEO of the Investigative News Network, a foundation-funded non-profit aimed at supporting non-profit public-service journalism. “We want to help make sure these organizations can take advantage of what’s been done before.”
7. Show you’re worthy of investment
“You’re going to want to be able to answer questions like how much money you need and how you’re going to spend it,” Davis said by phone. “You have to be able to show your plans, show your contingencies and demonstrate you are worthy of that investment.”
Ford said as an investor he wants to know how much money an entrepreneur needs to get to the next point, what that next point looks like and if an entrepreneur will be able to use investment funding to get there.
8. Plan for the long-term
Keep in mind that money from buyouts disappears quickly: Investors will demand returns, and foundation funding may run dry within a few years.
“Foundations are not equipped and are generally unable to provide sustaining support,” Davis said. “It’s a short-term revenue solution.”
Whatever your source of funding, it’s temporary. To survive, entrepreneurs should be thinking of how to create sustainable ventures even as they’re launching their businesses.