You know the business you want to build, but where can you find investment to grow your start-up?
Liz Hardy (Editor, The New Goldrush: A Quick Guide to Startups)
Figuring out how to finance your business venture can be daunting, to say the least. The prospect of all that hard work – all those late nights and early mornings – falling through due to lack of money is not a pleasant one. The economy, as major news outlets all seem to delight in telling us, is not fantastic right now, and with so many start-ups vying for investments, it seems almost impossible to know where to begin.
The good news is that investor interest in tech start-ups has never been so high. True, there are a lot of startup companies around. Equally there are a lot of investment opportunities. If you know where to look, you’ll immediately be one step ahead of your competitors.
Governments are placing a bet on the outsiders, the dreamers and visionaries – hoping one of them will found the next Facebook and transform the fortunes of their countries’ economies. It’s a gamble, but politicians are willing to place the bet.
Meanwhile, the positive effect small businesses have on local economies – job creation, especially,
This means, for you, that governments have never been more keen to encourage your business to grow. On a local level there are other organizations, some privately backed, others backed by government agencies, designed to help those wanting to start a business. Every government that can afford to divert funding this way has done so. Experienced entrepreneurs are often brought onboard as mentors, offering advice, access to networks and support for the next generation.
In the UK alone, there are 737 government-supported schemes designed to get your business to grow. They offer grants and loans to start-up businesses. They also offer mentoring schemes and advice, usually for free – not something to be sniffed at
Incubators, like TechStars, founded by David Cohen, are very useful for launching young companies. The Wall Street Journal suggests that graduates of incubators have already raised $1.6bn in follow-on funding, and created over 5000 job – and that’s a conservative estimate.
Getting a place at in what are essentially Ivy League – caliber institutions is obviously highly competitive, and your company and your product/idea will have to stand out from countless others vying for a place. Still, you’ll never know if you don’t try. You know that your business has what it takes to make it. Let the people running startup incubators know it too.
The number of incubators is expanding as large corporates become aware of just how good the products created by startups can be. 02-Telefonica are getting in on the game with their Wayra network. There’s 13 of them across the globe, which have produced 265 new companies at the time of writing. See if your company could make the cut here.
If you don’t win a place in one of the highly competitive incubators, you’ll need to secure funding elsewhere. Seeking out ‘angel’ investors will give you the capital you need to get your young company off the ground.
In the US alone there are 258,000 active angel investors who invest $20bn per year into around 60,000 companies (normally between $10-100k). According to research by MIT, Harvard Business School and Startups.co, a seed-funding platform, having an angel investor makes your business “significantly more likely to survive at least four years.” In startup terms, that’s huge – sometimes surviving a quarter is reason enough to celebrate.
So… how to find one of these magical beings that will invest in your company and miraculously bolster its chances of success and survival? The short answer is that they come in many forms. Sometimes angel investors can simply be friends or family in the position to lend you a helping hand. Sometimes they are more prolific individuals known for their investment activities. Amounts of money on offer vary. Cast your net far and wide whilst searching - pursue angel investment giants by all means, but don’t ignore the world closer to home.
Share Your Other Sources of Investment With Your Fellow Women 2.0 Readers
About the guest blogger: Liz is a communications and social media professional for high growth startups and SMEs, with a wealth of experience in developing message strategies. Her experience encompasses copywriting, proofreading, and editing content and copy for businesses. Follow her @PlaysWith_Words.