Jul . 2016

What are the Ways to Get Funding?

04.July.2016 Florence KANAAN tags: Funding , , Finance , Business

Getting a new business or idea funded can be a strenuous task. In reality, and according to a study conducted by Forbes magazine, less than 1% of startups obtain venture capital financing.  It often takes some non-traditional thinking to get resources for your organization.  Below are three out-of-the box ideas you might want to study. 


#1 Be Open to Unlikely Sources

It takes you too much time to raise money for your business and you have to work a lot at it. Sometimes, you succeed at it in the most unlikely ways. A weird and funny example about getting money from an investor in an improbable way is the following: A venture capitalist, who owned a vending machine business, was looking for a startup to invest in. He said to one entrepreneur that he had some money just laying around (all in small bills and change from his vending machine company) that he could use to invest in the company. The problem was he did not know how much. It would be the entrepreneur’s if he could count it and box it.  Therefore, the entrepreneur spent hours counting the money with nothing bigger than $5 bills and a ton of loose change.  When he got to $20,000 after 3 hours, he boxed it up and drove it straight to the bank.


#2 Monetize What You Already Have

Every one of us might have underutilized assets that can be monetized. The following is an example of a person who wanted to start a business but did not have any capital and who made use of what he already had. He could rent out his house in a ski resort during the ski season. At the end of the season, he had earned several thousands of dollars, enough to start his real venture

Another good example is of Tina Seelig of Stanford. She challenged her students to make as much money as possible with only $5 and 2 hours.  They rapidly understood that their time was the most precious thing they had and not the money.  A participating team stood in line at a high-demand restaurant on Saturday night for 2 hours and sold their spot in line multiple times. Knowing that each person has 24 hours a day, do some creative thinking and be willing to spend your time in special ways.


#3 Consider Alternatives

You can always find opportunities if venture capital financing or a bank loan does not turn out.

An example could be Crowdfunding. However, Revenue Based Financing, a sort of a hybrid structure between debt and equity, is getting more and more famous. It is about a company selling a % of future revenues for some capital investment. Unlike equity financing, it is non-dilutive so founders can keep their equity.  Unlike debt financing, payments change depending on the level of revenue a company has.


These are not the only ways to finance a company. You may find others or even new ones during your career. Do not hesitate to share them!