Whether you have watched “Shark Tank” on television or you have viewed clips of “Dragon’s Den” on YouTube, you know how hard it is for tech entrepreneurs and small IT businesses to be approved for capital, even if they have an extraordinary idea (or so you think!).
Since the Great Recession, it has become more difficult for startups and smaller enterprises to get their hands on some much-needed financing, either from venture capitalists or traditional financial institutions. There are many reasons outlined by industry observers: too risky, too much competition, not enough sound private firms, not enough assets.
In other words: that startup in your garage can’t reach its full potential because you are not receiving even a minuscule amount of financing.
Ten years since the financial crisis, how can you attract some capital? How can you garner some financing that can help you hire some workers, expand operations, or invest in new equipment? Here are five business financing tips for IT startups in 2018:
1. Crowdfunding, Patreon & PayPal Tipping
In the era of YouTube demonetization, many channels rely other methods to monetize their content. They sell merchandize, open up a Patreon account for monthly contributions, or set up a PayPal tipping feature.
For those who have a great new service or product, they start to crowdfund and offer a diverse array of perks to those who chip in – a few bucks, a few hundred dollars, or a few thousand dollars.
What does this all mean to you? To quote the “insert year here” crowd, it’s 2018.
This means that you need to explore modern avenues to garner business financing. Like other methods of the past that have been demolished thanks to creative destruction, the old ways of tapping funds are changing too.
So, if you wish to pump your firm with cash, search for new ways to raise capital.
2. Attract an Angel Investor
An angel investor is a rich individual who will park their own cash in a business in exchange for ownership equity or convertible debt.
This is the type of financier you need to attract. But how? Find the right angel investor.
Here are a few suggestions from successful entrepreneurs to keep in mind:
- Use the old elevator pitch and avoid the industry jargon.
- Add some experience to your business team.
- Only focus on an idea when you’re passionate – don’t follow the herd.
- Know the facts like the back of your hand (numbers, the market, data, etc.).
- Even if they’re not interested, you need to stay in touch.
Remember, there are thousands of other businesses just like yours that are asking for money. You need to be different, you need to be remembered, you need to be unique.
3. Seek Out Government Grants – or Other State Funding
There is money out there just waiting to be picked up. You may find it hard to locate funds in the private sector, but you can come across easy-to-access financing in the public sector.
All three levels of government across the Great White North offer grants to businesses that reside in industries that politicians love, such as green energy or technology. Do you think you’re in a sector that will be adored by public officials?
Government grants are usually the go-to source for free money. That said, there are other forms of government funding that your startup can take advantage of: tax credits, tax deductions, subsidies, and a myriad of other funding mechanisms.
4. Never Sour on Your Business or Get Discouraged
Let’s be honest: if you’re struggling to obtain financing for your business, it can be frustrating.
But there is one thing that you need to mind yourself: life is tough, but if it were easy then it wouldn’t be fun.
As an entrepreneur, you are proud of the idea you have, the business you have founded. By thinking about this once in a while, you must never sour on your business or get discouraged. Despair is not an emotion you need in the ultra-competitive business world.
If you’re disgruntled, then why would anyone want to invest in your company? Why would the best and brightest want to work for you? As a business owner, you need to stand straight with your shoulders back.
Business financing is a rough pursuit. You’re not the only one who has had it rough. Do you think Jeff Bezos, Steve Jobs or Bill Gates received instant funding? It took a long time. Now look at how much money they made! Giving up is not in the vernacular of any entrepreneur.
Remain confident in your idea, use 21st century tools, and use the power of positivity (at least when pursuing angel investors). When you have these concepts, then you can thrive.