Raising startup capital can be extremely challenging and humbling, sometimes even humiliating. Whichever way you decide to source your capital, there will be a lot of sacrifices involved and if you don’t know that, you will definitely fail.
Whatever business you would like to start or grow, you will need money. However, I would do you a disservice if I did not mention to you that early cash is also a brutal killer of viable startups. And it kills violently. So while you are looking for capital, try to follow the correct procedure.
There are several strategies for raising capital. Using a combination according to my chronology is the best mechanism I have seen that works. At least for me. Here is how to go about it:
- Make sure that your paperwork is in order and you are in compliance.
- Have a bank account: You may start with mobile money. As long as it is strictly for business.
- Bootstrapping: This is the backbone of entrepreneur capital raising. Especially if you are venturing into a field for the first time. Use your personal savings or income to fund the initial stages. Regardless of how little it is, make sure you start doing business with your own money or skills or resources. Learn from your own mistakes, lose your own money, and learn the ropes with your resources. DO NOT SKIP THIS STEP HOWEVER SMART YOU THINK YOU ARE.
- Friends & Family: Once you prove that your business idea works and you show growth, cashflows and proficiency, then go out there and seek investment from close contacts who believe in your idea. If no one in your circles believes in you, if you can’t find anyone among your family, colleagues and friends to trust you, then you have to check yourself. There is something wrong with either you or your business idea.
- Angel Investors: At this point, you would have evaluated your venture prospect, and you would have experience, projections, cashflow statements, semi or fully-audited accounts and proper acumen in your field. This is when you can approach high-net-worth Individuals who provide capital in exchange for equity. It is very unfair of you to approach people to risk their money in a business you know is failing. Even if you believe in yourself. Business is not charity. You are not a charity case. Do not belittle yourself. You are an entrepreneur. Make a deal no one can resist my friend. Be irresistible.
- Venture Capital Firms and Accelerators: Once your business is flourishing and the only thing barring you from achieving exponential growth are problems to be solved by money, then you can approach these firms that invest in high-growth potential startups. In Zambia, I have heard of Kukula Capital and Bongo Hive. There are many more. Do your own research.
- Crowdfunding Platforms: In cases where your business does not conform to venture capital requirements or you have a potentially viral product or any other reason, you can use platforms to gather funds from a large number of individuals, who are either buying your product in its infancy or just supporting a novel or Nobel idea.
- Strategic Partnerships: Collaborate with established companies for funding or resources.
- Grants & Competitions: Apply for startup grants or participate in pitching competitions. Government programs such as CDF, CEEC, and NGO programs must be something you apply real effort in trying to get.
- Bank Loans: Explore traditional loans or lines of credit from banks. This must however directly finance a project or contract. Not operations. Make sure profits from your project or contract offset the loan completely.
As I mentioned in the preamble, combining multiple methods or tailoring your approach to suit your business’s needs often yields the best results.
Author: Mujuni Henry
JUNIITV
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