Money or the lack of it has a huge impact on the success of a new business and worrying about it keeps many entrepreneurs up at night. In this post we want to take that pressure off a little bit by sharing with you 7 places to find funding for your start-up apart from a bank loan or credit card.
1. Trade equity
Money is valuable but so is your time and skill set. Think creatively, what do you need that you could trade for? For example do you need a website designed? This could cost around £500 but instead, if you knew a web designer well enough, you could ask for a website in exchange for your services. Another example is renting a desk within an office in exchange for IT support. What you chose to negotiate and barter with will depend on your skill set and what you need but don’t be afraid to be creative.
2. Agree on an advance
Negotiating an advance from either a strategic partner or big customer is a way to alleviate the cash flow issues that start-ups can struggle to overcome. Be aware that the person you approach with this proposal has to know you and your company well and be on board with your vision. If you approach the wrong person with this suggestion, it could potentially make you look weak.
3. Apply to an accelerator
There are fantastic organisations created exclusively for the purpose of supporting start-ups. Each of them are either associated with a University, charity or big company which is how they get access to such large levels of funding. They offer more than cash though; they provide logistical resources such as office space, business coaching and training.
Examples of accelerator’s include;
4. Venture-Capital and angel Investor’s
Venture-capital investors are firms that use other people’s money collectively to invest and are therefore looking for big gains. They are often willing to put in more than a million pounds into a business which is why they are very selective what start-ups they select and the application process is complex. They are looking for businesses that have already made significant progress and have a sound plan for growth.
Angel Investors are individuals or groups who are high level earners and want to support ambitious start-ups. Like the venture capital investors, the promise of return has to be high and the businesses they invest in need to be established enough to evoke confidence.
There are online platforms you can use to find investors including The Angel Investment Network. and Venture Giant
5. Apply for a small-business grant
The government have funds allocated to support certain industries. If you have a product that supports the development of social care, innovative technology, education or medicine then you may qualify for a government grant or loan. Additionally, the government are keen to support new businesses that look set for growth and could potentially hire staff which improves the local economy overall.
6. Don’t forget about your Family and Friends
Family and friends are the most common source of funding for new start-ups but if you are considering asking them then we recommend you don’t do it over a pint or at a family BBQ. Present your opportunity as you would to any investor, show them that they have every reason to believe in you and that you have a clear, thought out plan and a product worthy of investment.
Be aware borrowing money from those nearest and dearest to you can cause conflict though so make sure your relationship is strong enough to begin with.
7. Use Crowd funding
Crowd funding has literally revolutionised the process of funding applications and turned every rule up on its head! It is the newest type of investment and is inclusive of everyone. Zack Danger Brown created a campaign to make potato salad that attracted 6,911 backers who collectively donated $55,492 to help Zack make a potato salad.
Sounds crazy we know but Zack’ s potato salad proves to run a successful crowd funder campaign you don’t have to prove your business plan is worthy of the interview phase in the Apprentice, instead you have to capture the imagination of the masses. This is why it takes a completely unique approach to any other funding stream available.
In return for a donation, your investors will receive the product at a later date. You can also get quite inventive with your rewards to your pledgers and offer more to those who commit more money, whether it is a mention on your website, a product engraved with their name or a signed edition. How you set up your campaign and what you offer will depend on your business and audience.
An additional huge benefit of the crowd funding option is you gain exposure and a following before you even launch your product. It is great publicity.
There are sites like Kickstarter and Crowdfunder that host your campaign
Spend your money wisely
Once you have your money it is absolutely vital you spend it wisely. Having a good product that fills a gap within your market is absolutely essential for success. Here at Nexus we help ambitious entrepreneurs see their dreams come true by providing product design solutions for start-ups through the design and build process, helping you get it to the consumer. We also offer continuous support afterwards to maximise your investment. For more information of how we can help you, contact us at info@nexus-ie.co.uk or call us on 01353 653 855
