Fundraising For Your Startup

Finding funds for a business is a full-time job and, startups that are already outperforming their competition usually get more funds. As you attempt to gather funds for your business, keep checklists handy because every investor has specific demands, which you must meet. But, you cannot get to these checklists until you have learned about the key players.

This article will attempt to answer two questions: How to raise funds if you are just starting out and still in rough waters? and, How to raise funds once your company has gained some reputation, revenue, and advantage over the competition?

If your business is in the early stages of its life cycle, then you can raise funds as follows:

• Word of mouth: Spread the word to everyone you know including family members, friends, volunteers, interns, mentors, and former or current colleagues. Feel free to speak to elderly people who are able to help you out. It is a fact that seniors tend to be more generous! It doesn’t hurt to ask everyone you come across to introduce your fundraising needs to their entire network.

• Join a relevant organization: Industry organizations like MPI play a critical role in accelerating the development of your business by allowing you to surround yourself with like-minded individuals. Make special business cards that introduce your fundraising project and share them with others.

• Approach the community: Some religious places of worship and community centres have free community boards where you can leave a flyer about your business’s fundraising needs.

• Crowdfund: Crowdfunding is on the rise. It is very easy to introduce your crowdfunding project to a large crowd by using digital tools like social media and free press release distribution sites. Know that you cannot be successful in crowdfunding unless you are willing to market and brand yourself properly—make sure to save some cash for this.

• Share your story: YouTube offers a great avenue for local business owners to share their best moments, milestones, challenges, and future visions. Document your personal story in detail because doing so will not only help you gain respect from industry members but also improve your reputation among current and future investors.

• Find a cofounder: Yes! I know you really want to start out on your own, but don’t start looking at this opportunity as a time to play it solo. If you team up with somebody, you will be deemed more intimidating. Use the net to access sites like FounderDating where you can search for suitable cofounders.

• Connect with angel investors: Angel investors used to be entrepreneurs themselves once. As such, they tend to be more willing to take risks. Stay detail-oriented when it comes to financial estimates and projections. Pitch yourself by discussing your company’s previous success and future plans and network properly by inviting them to coffee or sending thank you cards/emails.

If your business is successfully moving in the right direction but you still want to raise some capital, then try the following methods:

• Acquire a business loan from a bank: Banks review many things including existing capital, assets, reputation, and revenue before they decide to issue a loan. Your credit needs to be in good standing since it tells the banks about your budgeting and money management routines.

• Discover equity investors: Equity investors provide investments in order to become stakeholders, which means they are looking to take less risks. Specifically, they are looking for successful and well-established businesses that are generating enough profits and have ample investors and customers.

• Locate debt investors: Debt investors offer investments in the form of a loan, which you must repay along with interest. Debt investors are easiest to attract if you have impressive collateral but less capital.

• Seek venture capital firms: Venture capital firms are the most challenging to work with. Venture Capitalists are looking for 10 times the return; they tend to stay with you on a long-term basis and they receive compensation in the form of management fees and a portion of the profits. You can use sites like Crunchbase to find the right Venture Capitalists.

Remember, there are many financing options available out there. As you begin working on getting the funding you need, remember to pitch and network properly. You can start your quest by learning about the resources offered by the Government of Canada. Innovation Canada’s “Grow Your Business” site is a great start for Canadians who are looking for funding, loans, and capital investments.

Article compiled by Arzoo Zaheer, Expressions By ME