Have you ever thought of a great business idea but didn’t realize it? The capital, they say, is the lifeline of a business. 90% of startup businesses failed in 2019 due to lack of funds. Nothing is more demoralizing than having a great business idea and not have the funds to bring it to fruition.
I have a friend who got his startup funded because he had the right amount of information. He once worked at a venture capitalist company. When he finally decided to start his company, he was able to get funded – he had the right information and understood what needed to be done. Not so many people are so fortunate as my friend.
I believe that wealth is 60% information and awareness, and 40% action. Knowledge is potential. It becomes power when you act on it. This article will point you in the right direction of how to raise funding for your business. You must act in order to get the best result.
The following are the procedure you can follow in order to get your startup funded.
Bootstrapping your Startup Business
The process of utilizing personal saved-up funds or funding from friends and family is known as bootstrapping or self-funding. It is the easiest and most convenient. If you have a business idea that you would like to scale to production, you can save up some money to fund it. This is a good idea if your startup business isn’t in the manufacturing or construction industry. Those kinds of industries require a huge amount of money to start.
Self-funding is great for small businesses. You can seek financial help from friends and family. Friends and Family are always flexible with interest rates when it comes to servicing your loan debt. If you don’t have all the required funds saved up, you could approach the right friends and family members that believe in your idea. You could get part of the fund you need. If not all.
Raise funds through bank loan
The traditional way of funding a business is through the bank. Banks offer a variety of loan packages. When you approach a bank with a solid business plan and a good credit score, it could get funded. Some banks offer no-interest loans to customers. Some non-interest banks include Jaiz bank, Taj bank, etc.
Winning a Contest
Another way to raise funds for your business is by participating and winning a contest. If you win, you would make money and attract the attention of investors as a result of media coverage. Startup competition isn’t for the faint-hearted – losing the contest may be the end of that business as some people interpret the loss negatively by concluding that their idea is not good enough.
Starting a business is like fighting a war. You might lose some battles, and also end up winning the war. An entrepreneur must be willing to fail before success. Startup contests could be done through the submission of a business plan or business pitch.
Some startup competitions you can opt-in for are; Startup World Cup 2021, Arch Grants Competition, Collision 2021. Most of these competitions are in the US. If you are from Nigeria, You should be on the lookout for the TechPoint startup contest, Africa development bank startup contest, and other Africa-funded startup contests. Pioneer startup contest is currently ongoing and it’s open to Africans and non-African.
Another way to raise funds for your startup business is by pitching your business on a crowdfunding platform. Crowdfunding platforms are basically set up for individuals to pitch their business ideas or challenges to a community of investors or people willing to support their ideas or cause. You can pitch your business plans to the community, long and short-term growth plans, and your business potential to grow. If your idea is bought by the crowd funders on the platform, they’ll make a pledge to support your business model publicly and donate funds respectively. Some crowdfunding platforms you could pitch your business are; Kickstarter, Indiegogo, Patreon, GoFundMe, Chuffed, etc.
You are probably wondering if there is anything like Angel investment or Angel investor? Not Heavenly Angel, I mean, human Angel. Angel investors are basically people with a huge amount of capital and are willing to invest it on over the edge business ideas. Angel investors have helped to start up many prominent companies including; Google, Yahoo, and Alibaba. This alternative form of investing generally occurs in a company’s early stages of growth, with investors expecting up to 30% equity. They prefer to take more risks in investment for higher returns. Some platforms to find Angel Investors are; AngelList, SeedInvest, On Startups, Hyde Park Angel Network, etc.
Venture capitalists are professionally managed funds, big bets are made here because investment is only made in companies with growth potential. This investment usually lasts for three to five years. Venture capitalists pull out when there is an acquisition or IPO. A venture capital investment may be appropriate for small businesses, that are beyond the startup phase and already generating revenues. Fast-growth companies like Flipkart, Uber, etc with an exit strategy already in place can gain up to tens of millions of dollars that can be used to invest, network, and grow their company quickly. Some venture capitalists companies you can apply to include but not limited to; Khosla Ventures, Sequoia Capital, Accel, Ventures Platform, etc.
The strategies in this article can be the springboard your startup business needs to get the funds required for you to scale from zero to hero financially. You should not let money stop your grand idea from making it to production. Some business ideas may need some tweaking to appeal to the desired market and potential investors.
You can always get in touch with our team of business consultants to discuss the trajectory of your startup business and help you discover the best platform to source for funding. Like I categorically stated above wealth is 60% information and awareness and 40% action. Get in touch with our Talku Talku Business expert to get 60% of the information and let us take the 40% action with you.