8 Ways to Raise Funding for your Business
Starting a business idea is hard. It takes a lot of time, energy, and money to get a business off the ground. One of the biggest challenges that entrepreneurs face is finding ways of raising capital for their businesses. In this blog post, we will outline 10 different ways that you can go about raising money that you need to succeed. We will also provide tips on how to make the most out of each option to raise money for your business idea or existing company. So, if you are looking to raise money for your business idea or existing company, read on!
1. Crowdfunding
Crowdfunding is a great way to raise money for your business. There are many platforms that allow you to crowdfund and they can be an excellent source of funding. The two most popular crowdfunding sites are Kickstarter and Indiegogo, but there are others as well such as Crowdcybe, GoFundMe, Tiltify, and Patreon. You can see a list of top crowdfunding platforms in Europe here
(https://crowdsourcingweek.com/blog/top-15-crowdfunding-platforms-in-europe/).
Aside from raising money, another great thing about crowdfunding is that it allows people to invest in your business idea. This can help you to build a community around your business and get some early adopters. Crowdfunding can also help you to validate your business idea and get feedback from potential customers.
When crowdfunding, you need to make sure that you create an attractive and compelling campaign to effectively raise money. You should also make sure that you understand the terms and conditions of the platform that you are using. Some platforms charge fees for successful campaigns, so be aware of those costs. Also, be sure to read the fine print in order to avoid any surprises.
Tips for Crowdfunding:
Do your research – find out which platforms work best for your business and target audience
Create a detailed campaign page including video and images of what you are trying to achieve
Build a network of supporters and share your campaign with them so they can help spread the word
Be prepared to make updates regularly during the campaign period as this will attract more people (and money) over time. Remember that every update is another opportunity to raise money from investors!
2. Personal Loans from Friends and Family
A personal loan is a good alternative if you have friends or family who are willing to provide start-up capital. This is especially true if the individual lending you the funds has a strong rapport with you and believes in your capacity to repay it.
When borrowing from friends or family to raise money for your business, make sure that you create a written agreement specifying the terms of the loan. This will help to avoid any misunderstandings down the road. It is also important to remember that not everyone may be comfortable loaning money to friends or family, so don’t take it personally if someone declines your request.
Tips for Personal Loans from Friends and Family:
Make sure that you are up-front about what you wan to raise money for and what the repayment terms will be
Create a written agreement and have both/all parties sign it
If possible, try to pay interest on the loan or offer some other form of compensation
Make sure that you repay the loan on time to avoid any unpleasantness.
3. Selling Equity to Angel Investors or Venture Capitalists
If you have a solid business plan and are looking for more substantial funding such as private equity or venture capital, then angel investors or venture capitalists may be a good option. Angel investors are individuals who invest their own money in early-stage businesses. Venture capitalists are firms that invest money in startups in exchange for equity (ownership) in the company. Some examples of angel investment and venture capital websites in the UK are AngelList, Angel Investment Network, and VentureFounders.
When approaching an angel investor or seeking to attract venture capital investment, it is important to make sure that your business is ready for huge financial assistance. This means having a well-developed business plan, a strong team, and evidence of traction (customers/sales). You should also be prepared to give up some control of your company and share ownership to interested angel investors or venture capital investors.
Tips for Angel Investors or Venture Capitalists:
Have a well-developed business plan for angel investors or venture capital investors that includes financial projections. Get expert pitch deck and business plan help from Exalte Consulting, which is sure to impress your investors.
Show evidence of traction in your business (customers/sales)
Be prepared to give up some control of the business and share ownership with an angel investor in return for growth or startup capital
Make sure that you understand the terms of any venture capital investment agreement before signing it. You should also seek professional advice from a lawyer or accountant if needed.
4. Bank Loan
Obtaining bank loans from financial institutions is another option to raise capital. This type of funding can be useful if you need short-term small business loans and have good credit or collateral to offer. You will also want to make sure that your business plan shows how you are going to repay the loan over time so as not to default on it and lose any assets used as collateral such as property or equipment.
When applying for a bank loan for uses as your startup capital, expect some scrutiny by lenders who are considering whether they should lend money especially to small businesses. They may ask questions about your personal finances (credit score) and past borrowing history before approving an application with terms that work best for them rather than what’s best for you!
Tips for Business Loans:
Make sure that your credit score is in good standing and that you are able to repay the loan on time
Approach your bank first before seeking other financial institutions
Show evidence of traction (customers/sales) or previous business success to reassure lenders about their investment decision
It is preferable if you have a significant portion of your own money towards the required funding as your own financial investment. Banks like to see that you have invested in the company yourself.
Be prepared to offer collateral such as property or equipment if necessary. This will help reduce risk for the lender by giving them something concrete they can get back from defaulting borrowers!
Make sure that your business plan shows how you are going to repay the loan over time so as not to default on it and lose any assets used as collateral such as property or equipment.”
5. Business Incubators
Business incubators can be considered one of the ways to raise money for your business albeit indirectly. They offer a wide range of services to entrepreneurs, which can include office space, mentorship, training and networking opportunities. They can be a great option for businesses that are just starting out and may not have the resources (financial or otherwise) to set up their own business operation. Business incubators can also be helpful in terms of getting introductions to potential investors and customers.
When looking for a business incubator, it is important to do your research first as not all incubators are created equal. Some focus on specific industries while others have more general programs. It is also important to make sure that the incubator has contacts with people who can provide capital for your business through angel investment or venture capital. Some popular business incubators for small business and growing ventures in the UK and Europe are:
TechCityUK in London
The Incubation Centre at the University of Liverpool
Wayra UK, which is part of Telefónica Open Future_ initiative
If you are interested in finding a business incubator near you, there are several online directories that can help such as:
The Business Incubation Index from the National Business Incubation Association (NBIA)
The European Network of Business Incubators (EBN)
Tips for Joining a Business Incubator:
Do your research and find out which business incubators are a good fit for you and your company
Expect to give up some control of the business and share ownership with the incubator as part of their investment agreement
Make sure that you understand what services they offer and how they can help you grow your business before signing an agreement with them
Be prepared to commit full-time to the incubator for about eight months or more if necessary.
You may need committing time away from family, friends and other interests during this period as it will be very intense but also rewarding!”
6. Grants from the Government
If you are a startup or small business, you may be able to obtain grants from the government to help with raising capital. Grants are financial awards given by the government to especially to small businesses and individuals who meet certain criteria such as having a innovative product or service, creating jobs, or being located in a disadvantaged area.
Several governments provide grants, subsidies and low-interest financing to businesses of all sizes. This funding can be used for a specific business sector or geographical location. Examples of grants for technology businesses in UK for example are the Innovate UK grants which provide funding for research and development projects in areas like health care, digital technology or manufacturing. Other types of government-funded programs include tax breaks on new equipment purchases (such as computers) and employee training costs if your company hires people from low-income families.
Tips for Government Grants:
Do your research and find out which grants are available as ways to raise money for businesses in your industry
Meet the eligibility criteria for as many grants as possible, such as having a innovative product or service, creating jobs, or being located in a disadvantaged area
Make sure you have a well-developed business plan that includes financial projections. Get expert pitch deck and business plan help from Exalte Consulting to make sure your application stands out!
Apply early, as grant opportunities can be competitive and often go quickly!
7. Pitch and Win a Business Competition
Business competitions can be a great way for small businesses with great business ideas to get the exposure and raise capital it needs to take off. Competitions are often judged by experienced entrepreneurs, investors or industry experts who can offer you feedback on your business as well as potential opportunities to raise funds. They are especially a great way to raise startup capital.
There are many different types of business competitions available, from small local business ideas contests to large international events with multimillion-dollar prizes. Some popular competitions include the the Google Lunar XPRIZE which offers a $30 million prize for the first private company to land a robotic spacecraft on the moon, and the Virgin Media Business “Disruptive” Awards which offers £100,000 (about $130,000) to the winner of a contest for UK businesses with the most innovative product or service.
Tips for Winning Business Competitions:
Do your research and find competitions that are a good fit for your small business or growing venture. Make sure you meet the eligibility criteria and have a strong pitch deck and business plan
Prepare well for the competition by practicing your pitch and answering questions from judges. Have someone else critique your presentation and be prepared to make changes
Showcase your company’s strengths and how you can solve a problem or fill a need in the marketplace
8. Raising Grants from Trusts and Foundations
Trusts and foundations are organizations that provide ways to raise money for individuals, businesses and charities for a wide variety of purposes such as education, health care or the environment. Trusts and foundations can be a great way to raise money for your business, especially if you have a social mission or donate a portion of your profits to charity.
There are thousands of trusts and foundations in the world with different areas of focus and grant-making criteria some examples in the UK are the Big Lottery Fund, Paul Hamlyn Foundation and the Wellcome Trust. Other international ones are the Bill & Melinda Gates Foundation, which funds social entrepreneurs doing work around global health and development; The Skoll Foundation, which provides grants to entrepreneurs with innovative solutions to problems facing humanity today; or Ashoka Changemakers, a crowdfunding platform for social enterprises.
Tips for Raising Grants from Trusts and Foundations:
Look at what types of businesses are being funded by each trust or foundation in order to find ones that might be interested in your business model
Find out about their grant application process and meet all deadline requirements as well as any eligibility criteria such as having non-profit status or proof of tax filings from previous years.
In Conclusion
Whether you’re just starting out or have been in business for a while, you need a compelling plan to raise raise capital for your business. Here, we’ve outlined 8 different options for raising capital, from angel investment and government programs to business incubators. And if you need help putting together a compelling business plan that will impress potential investors, be sure to visit us at www.exalte.co.uk. We offer comprehensive business planning and pitch deck writing services and can help you make your dream of becoming a successful entrepreneur with funding a reality.