Fundraising

Ways to get business funding

A Hunt Looking for a co founder to develop an app

January 10th, 2021

How did you raise initial capital for your startup/ business? Are there companies out there that help startup businesses acquire funding? It could be through grants/loans/lines of credit/etc. I would greatly appreciate any advice!

Paul Garcia marketing exec & business advisor

January 11th, 2021

The generic answer is that 90% of startup businesses do not receive any money from outside sources. That means it all came from owners' pockets, family, or sometimes friends. That's savings, personal loans, and other sources you personally guarantee, not investors.


Yes, there are a lot of companies and individuals that promise to help startups raise funds, and most of them are scams, meaning they are in the business of getting people to pay them to try to raise funds, but don't guarantee anything. Stay away.


The first thing you need to understand are the different sources of funding, what their expectations and requirements are, and how to motivate such sources to open their purse. You are likely to find that your business is only eligible for one or two of the half dozen types of funding out there, maybe none of them.


I recommend reading the book "The Art of Startup Fundraising" by Alejandro Cremades, founder of CoFoundersLab. While it is not a guide to fundraising, it will educate you on the funding types, the requirements, and path to approaching each different type of funding source, at least for investor money. It will not go into loans and grants or standard banking products that are not unique to small business.


Keep in mind that neither banks nor investors give money to experiment with ideas. You need to prove that you are a viable business, that you have validated your marketing strategy, and that you have a plan to move forward without outside money. You then can demonstrate how outside money will improve the success of your business that would still operate without outside funding. Lenders want to lend money to people who don't need it. If you are entirely dependent on borrowed money, you are an extremely high risk. And if your product is an app, you have no assets for them to recover, so an even higher risk.


My best advice is to plan for what you would do if you knew you would never get an outside dime. What would you change about how you launch your business or even what your product is and does? Once you figure that out, it will be easier to find ways to amplify your small business with outside money. There are very few sources of money for companies that aren't doing any sales yet, far more that have small but steady sales. So, consider that you may need to launch on your own before you could ever attract or borrow other people's money.


Thomas Ruge Driven, Passionate and Curious

Last updated on January 12th, 2021

Besides the typical answers like grants, angels, VCs,...

Except grants, all options come with significant costs down the road (equity, debt, loss of decision power,...).


My advice, create some initial revenue for your startup in the area your company is working and then get a loan with low interest rates.


I built a company from scratch around a remote desktop software for enterprises. I reached out to a potential customer who did pay me to build the software at a reduced cost for non-exclusivity. This way I could still build a business around our software and at the same time build a reliable (albeit small) revenue stream.


This way I built cash flow which then after 2 years allowed me to get multiple SBA loans at very low interest rates, which gave me the money to scale up the company. If you do this right, you can easily get loans in the size of a smaller A-round without losing any equity.


Those first 2 years also helped me to build/refine our product, our business plan, build IP and our marketing strategy. It also proved to myself that this is a viable business.


Point is, if you can build revenue from the get go (and there are MANY ways to do so...), you have access to much cheaper money than through venture capital or unsecured loans. Delay taking in expensive money as long as you can! ...and should you decide later to still get equity based funding, you will get much better terms than at the beginning of your startup journey because you proved your business.



Abir Hossain Business Manager,specialized in international collaboration, managing project, B2B sales & operation

January 10th, 2021

Hi Good questions indeed. I am almost done with a business funding toolkit. Sharing the link so that you can get the copy free as soon as it is launched in the next few weeks. https://forms.gle/VVBTodzEeSqN6ULW7 Feel free to ask if you need further assistance. Warm Regards, *Abir H.* Consultant - Sustainable Business Development Connect via LinkedIn Gothenburg, Sweden Phone: +46722904651 --------------------------- Read my recent article about integrating SDGs in Business Model: 10 simple steps to integrate SDGs in Business Model like a professional