3 Ways to Raise Funds for Your Startup
- Admin
- Dec 15, 2016
- 2 min read
Access to funding continues to be a challenge for many entrepreneurs in Kenya and the rest of East Africa. However, there are sources of capital for startups as well as working capital available to entrepreneurs in need cash to cover inventory costs, payroll, etc.
As the founder of a startup, you were probably the source of initial capital for your business, you were able to acquire some clients and put together a respectable business. Now you need the extra capital to hire more salespeople, or perhaps to launch a big marketing campaign.
When it comes to raising funds for your startup, there are various sources of funding out there. Some are well-known conventional means and others not so conventional.
Here are 3 simple ways to raise cash for your startup or small business:
1. Crowdfunding
Raising cash via crowdfunding networks has become a hassle-free way for entrepreneurs to raise funds these days. This avenue is especially suited for businesses with a charitable component or tech-based ventures. There are several crowdfunding platforms available in east Africa. Platforms such as Thundafund and Lelapafund are among some of the most exciting new offerings in this arena.
2. Get your clients to fund you
Most entrepreneurs like to share stories of how they acquired their first client or how they managed to close their first sale. They typically employ a “fake it till you make it “strategy when starting out. While working out of a closet or a garage, they print up business cards with a prestigious address and fancy logo and close the deal. You can go this route as well. Try to get your first clients to commit cash to a product, then use the funds to finance the creation of the product. This plan will not work for every type of business but sure works for software firms.
3. Pay employees with equity
One of the perks of working at a startup is being able to own a piece of the potentially successful company. Most folks who seek employment at a new firm will jump at the idea of taking home less than when they would make at a well established firm but also stand to make it big when the company goes public or is sold to a bigger firm.
Take advantage of this phenomenon by offering your employees equity in your firm as a portion of their pay. You could also try to make the opportunity available for them to buy more stock in the company beyond their paycheck. This might provide you with the much needed funds to attract top talent in your field without having to pay market rates upfront.
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