Getting funding for your startup is tricky. We’ve mentioned before in our regular articles how banks just don’t want to loan to new businesses and if you do find one that will, you’re going to pay a lot for it and have to provide a personal guarantee. No ideal for many business owners.
So that leaves equity financing – Finding an investor is well known, but is there another option?
Crowdfunding is a relatively new way to raise money. The rise of the internet and technology has allowed anyone with an idea to raise financing from a ‘crowd’ of people.
Statistics show that in 2012 there were about 450 crowdfunding platforms. In 2016 that number has risen to over 2000 and its rising daily.
So how does it work?
Essentially the idea is that anyone can raise money for a business (or project) by raising small amounts of capital from a large number of investors.
Traditionally businesses might raise larger sums from one or two investors, crowdfunding flips that on its head and does the opposite.
How do I list my business?
Firstly you decide on your preferred platform.
Considerations like the target market, fees, reach and popularity might play a big role in who you choose. There are thousands including some of the more popular ones like Kickstarter and Crowdcube.
Secondly you work on presenting your idea in the best way possible to get the maximum investment.
Thirdly you want to promote awareness and drive eyeballs to your campaign.
At RJF we have helped clients successfully raise significant capital through the popular crowdfunding platforms, so are well placed to guide and advise on the best processes and practices.
One of the more frustrating challenges with some of these platforms is the noise. There are thousands of ideas, businesses and projects on there all battling for attention. So, as you might imagine, getting your idea to stand out from the crowd requires some skill and experience.
You need to be able to present your idea in a way that excites investors, makes it shine above the noise and ultimately gets you the funding you want.
Other RJF tips for getting funding:
- Get some skin in the game – investors want to see you’re committed. Having some of your own capital at risk ensures you’re going to see it through thick and thin.
- Come up with a Minimum Viable Product (MVP) – If it’s an app or tech, spend some time and money coming up with something that ignites the investor’s imagination. Something that does just enough to show them how it will work and look.
- Take it to the next level – Ideas are hard to get investment on. It can be done but generally speaking you want to move things forward a bit. Prove demand, prove your solution works and then start to look for funding. You’ll find investors far more willing and receptive once you’ve got a bit of traction.
If you’re a business looking for help with raising capital, talk to us.
Our managing partner Rob has had a variety of experience raising capital through multiple different channels. We have the network and knowledge to go to the right place with the right idea and get you the funding you need to build and grow your business.