Starting a Digital Startup: Strategies for Budgeting and Finding and Securing VC Funding

Discover key insights on budgeting and securing VC funding for your digital startup. Learn effective budget management techniques and strategies to attract investors, including research, networking, and crowdfunding. Set yourself up for success in starting your venture.

In this article, we’re going to dive into further detail on budgeting and securing VC funding (or funding in general). If you haven’t done so already, be sure to check out the first article in this series, as this touches base regarding the second of four points to consider when starting a digital startup: "Are you investing in this on your own or do you have investors?". This is an essential factor to consider because it affects everything from budgeting to decision-making. In this post, we'll go into detail on these things, and give some insight on how you can better plan what’s best for you and your needs.


In any of these situations – your own funding or VC backed, it's essential to budget wisely. You'll need to identify what expenses are necessary and where you can cut back to save money. Keep in mind that every expense will affect your budget, from the team to the software and hardware. A tight budget can force you to be creative and find alternative solutions that you may not have thought of otherwise. Whether your budget is large or small, I have seen things get out of hand quickly, and if you’re not careful, it could be the end of your startup before it even began. Here are a few tips to help you budget wisely:

1. Identify the essential expenses: This includes expenses such as team salaries, software, hardware, office space, and more.

2. Prioritize: Once you've identified the essential expenses, prioritize them based on their importance to your startup.

3. Cut back: Look for areas where you can cut back to save money. This may include reducing team size or finding cheaper software alternatives.

4. Monitor your budget: Keep a close eye on your budget and adjust it as necessary.

5. Plan your MVP wisely: This is often overlooked or in many cases, not understood. We want things we make to be the best of the best. It seldom works like that. Plan your MVP to include the minimum features that your believe users will love, and from there, improve it based on actual data and feedback. Launching with something that took an obscene amount of time and with hundreds of features that you think people will love can quickly deplete your budget and kill the project. This is, in my opinion, one of the most important points that I will bring to your attention.

Budgeting when you have VC or investor backing

If you have any kind of investor backing, it's essential to keep in mind that they will expect a return on their investment. Therefore, budgeting is critical. Here are a few tips to help you budget wisely when you have VC backing or investor backing *note that all of the above points also apply here:

1. Understand your investors' expectations: Make sure you understand your investors' expectations, including their desired return on investment and their investment timeline.

2. Communicate with your investors: Keep your investors informed about your budget and any changes you make. Be transparent about your expenses and how you're using their investment but keep in mind that they are very busy and don’t need to know every tiny detail. Come up with some kind of “regular update” schedule in which you inform them of your progress/changes.

Searching for VC backing

If you don't have funding for your startup, you may want to consider searching for VC backing. Here are a few tips to help you get started:

1. Research VCs: Do your research to identify VCs that invest in your industry or niche. Look for VCs that have a track record of investing in startups similar to yours.

2. Build your network: Build your network and attend startup events and conferences. This can help you connect with VCs and other investors.

3. Prepare your pitch: Prepare a pitch that clearly communicates your idea, the problem you're solving, and why your startup is a good investment.

4. Be persistent: Getting VC backing can be a long and challenging process. Be persistent and don't get discouraged if you receive rejections. Keep refining your pitch and networking.

Try Crowdfunding

Searching for VC backing or investor backing can be a long and difficult process, and there's no guarantee that you'll secure the funding you need. Don’t let that fact stop you. If you don't have funding, you may want to consider using crowdfunding as an alternative option. Crowdfunding platforms like Kickstarter, Indiegogo, and many more that are constantly popping up, allow you to pitch your idea to a large audience and raise funds from individual investors.

Here are a few tips to help you get started with crowdfunding:

1. Research crowdfunding platforms: Do your research to identify crowdfunding platforms that are a good fit for your startup. Look for platforms that have a strong track record of successful campaigns in your industry or niche.

2. Create a compelling pitch: Create a pitch that clearly communicates your idea, the problem you're solving, and why your startup is a good investment. Use video and images to make your pitch more engaging.

3. Set a realistic funding goal: Set a realistic funding goal based on your startup's needs. Keep in mind that you'll need to offer rewards to your backers, so factor in the cost of those rewards when setting your goal.

4. Promote your campaign: Once your campaign is live, promote it on social media and other channels to reach a larger audience. Offer incentives for people to share your campaign with their networks.

5. Keep your backers informed: Keep your backers informed about your progress and any changes to your startup. Be transparent about how you're using the funds you've raised.

6. In conclusion, while searching for VC backing or investor backing is the traditional route, crowdfunding can be an effective alternative if you don't have funding. By following these tips, you can increase your chances of success and secure the funding you need to bring your digital startup to life.

Starting a digital startup can be extremely exciting and rewarding. However, it's essential to consider your funding options carefully. Whether the funding is from your own pocket, VC backing, or are searching for funding, budgeting is critical. By following these tips, you can budget wisely and set yourself up for success.