
Stage 4:
Acquire Startup Funding
Adequate funding is essential to get your new business off the ground. You'll need enough money to launch your business and to support it until it generates enough revenue to support itself.
There are a range of sources to choose from, including investing your own money.
Purpose
Acquire funding to launch your startup business and support it until it makes a profit.
Steps
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Assess startup funding options.
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Select funder target(s).
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Develop your pitch.
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Make your pitch.
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Negotiate terms.
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Draw down funding.​​​​​​
Target
You have sufficient startup business funding to prepare for launch, and enough in the bank to support it until it makes a profit.
Startup funding options
Review your cashflow forecast to identify how much funding your startup will need to reach breakeven.
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If your funding needs are great, you may want to consider pitching for tranches rather than a single lump sum.
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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.
Select Target Funder(s)
Your choice of startup funder will depend on your needs.​
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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 providing funding. This presents an opportunity to gain their guidance as shareholders, but may also constrain your freedom of action if they choose to closely involved.
Prepare Funding Pitch
Research each of your potential funders and their requirements to gain funding. This information will usually be available online.
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Most, but not all funders, will require a detailed business plan. A business plan template can be downloaded by clicking on the button in this section.
Use your Business Vision and Lean Canvas to provide content as you meet funder requirements for slide deck, brochure and well-planned pitch deck.
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Treat your funders like customers and pitch directly at what most interests them, not just at what you need.
Make The 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 Terms And Conditions
Even though you've impressed your funder and won their trust, your work isn't complete.
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You'll need 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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metrics and reporting
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Terms and conditions should be documented in a contract, signed by both parties. We strongly recommend that a lawyer review this contract on your behalf before signing.
We also recommended creating a written agreement if friends and family are funding your business. Doing so will force everyone to be clear about their expectations, and it will provide a reference document as remembered details fade.
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Build all agreed metrics and communications into your business processes during Launch Business.
Draw Down And Manage Funds
Formally request and receive the funding you've agreed.
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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 framework stage, Launch Business.