Stage 4: Acquire Startup Funding
Get the money needed to launch and operate your startup business
Overview
Purpose
Acquire funding to launch your startup business and support it until it makes a profit,
Objectives​
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Assess startup funding options.
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Select funder target(s).
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Develop your funding pitch.
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Make your funding pitch.
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Negotiate terms.
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Draw down funding.​​​​​
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Result
Your startup funding is sufficient to prepare for launch, and enough in the bank to support it until it makes a profit.
Identify startup funding options
Identify the funding options that will meet your business needs,referring to your Cashflow Forecast.
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Startup funding options are:
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Angel Investors & Venture Capitalists (VC's)
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Family and friends
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Crowd-funding platforms
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Grants
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Loans
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Own funds
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If you're using only your own funds, you can jump to Draw Down, which is the final step in this stage.
Click button and select Category
“Funding Sources”
Select Target Funder(s)
Your choice of startup funder will depend on your needs, as estimated in your cashflow forecast.​
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The best solution for your business could be a blend of funding sources.
Remember that lenders (banks, loan companies) will usually need you to secure collateral against personal assets, such as your home, to reduce their risks. This increases your risk, as you could lose your assets if your business fails.
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VC's and Business Angels will normally take a share in your business in exchange for funding. This provides you with an opportunity to gain their guidance as shareholders, but may also constrain your freedom of action.
Click button and select Category
“Funding Sources”
Develop Startup Funding Pitch
Research each of your potential funders and their requirements to gain funding. This information will often be available online.
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Most, but not all funders, will require a detailed business plan. You can use the template below to create a detailed business plan.
You may need to pitch to them with some combination of slide deck, brochure and well-planned pitch deck. Your Business Vision and Lean Canvas will help you here.
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Treat your funders like customers and pitch directly at what most interests them.
Click button and select Category
"Business Plan"
Deliver Startup Funding Pitch
The critical step in this stage is making the pitch.
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What you’ve already done to reach this point should have you well-prepared. Take a deep breath and win your funds!
Negotiate Startup Funding Terms And Conditions
Even though you've impressed your funder and won their trust, your work isn't complete.
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The next step is to agree terms and conditions, such as:
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interest rate
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repayment terms
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shareholding percentage
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influence over the business
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communications frequency, and content
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Terms and conditions should be documented in a contract, signed by both parties. We strongly recommend that you pay a lawyer to review this contract on your behalf before signing.
We recommended creating a contract even if friends and family are funding your business, as it forces everyone to be clear about their expectations. It also provides a reference document for all involved as your business develops and remembered details fade.
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Build all agreed metrics and communications into your business operational processes during Launch Business.
Draw Down And Manage Funds
Formally request and receive the funding you need for launch and early operation.
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If you have more funds than your business needs immediately, put the excess in a savings account. Doing so will remind you that this money shouldn't be spent now. As an added bonus, it'll earn interest until you require it.
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Once you have funding in place, you're ready to move on to the next stage, Launch Business.