The term ‘fundraising’ is often used interchangeably with ‘donation’, but it can take on a slightly different meaning. It has been one of the main sources of funding for many non-profit organizations and NGOs for many years. Fundraising businesses is also not new, but it has certainly become more common than it used to be. Technology has made it easier for businesses to look for investors, donors, and partners who are willing to help them market their startup for free. Fundraising isn’t just used to collect money for a cause or a business, but also for the purpose of establishing new relationships, improving a company’s reputation, or shedding more light on a cause. In this article, we will explain the different ways to fundraise your startup in more detail.
Ask Your Inner Circle
This is one of the oldest and most basic ways to raise money for anything worth funding. Family and friends who can vouch for you are a great resource to tap into if they are willing to invest money in your vision. The best time to look for funding from your inner circle is usually at the very beginning, right before you launch your small business, which is the most crucial stage because it is what gets your startup off the ground. However, just because they care about your success doesn’t mean that you should take your loved ones’ investment for granted; you need to make sure that they understand your plans, agree on the repayment plan, and are clear on the risks before accepting their money.
Crowdfund Your Idea
Crowdfunding is the newest fad in fundraising. Modern technology has allowed people to communicate easier, which allowed many startups to easily appear on the public’s radar. Crowdfunding isn’t just used by startups looking for funds, but also some established businesses, including game studios and publishing companies who are looking to expand their operations. A reliable crowdfunding platform is all you need to pitch your idea. You will have to present your business model and growth plan and showcase the value that your product or service will offer so that people would know what to expect from your startup. The most prominent crowdfunding platforms are Kickstarter and Patreon, which have helped many startups raise millions in dollars.
Seek Angel Investors
As the name suggests, angel investors can sometimes come to the rescue when it comes to funding a startup. Those investors are quite wealthy and willing to bet on businesses that many other financial entities may deem too risky or unreliable. As is the case with crowdfunding, you have to put together a solid business plan and prepare a great pitch to win angel investors over. As long as you present an idea that is out of the box and manage to showcase its promising potential, you are bound to find an angel investor who will be happy to fund your startup. While it may need some connections to get through to certain angel investors, it’s still possible to reach them online through platforms like angel.co and Cairo Angels. The investment range of angel investors can vary according to each project and the type of fund. From $10,000 to $6 million, it’s possible to get any project off the ground as long as you’ve got the right firm backing you.
Get a Venture Capitalist Onboard
Venture capitals are usually the go-to solution for established businesses that are looking for a significant amount of funds to expand, but it’s not uncommon for venture capitalists to invest in startups that show great potential. They can provide the funds you need to get your business up and running if you effectively explain the problem, industry shift, or innovation that you intend to capitalize on.
Venture capital funds are managed by professionals who have been in the business for decades, so they’ll expect nothing less than perfection when it comes to the execution of a business plan. They don’t invest in equity but rather the whole business, so you need to present them with accurate data and numbers that show that your small business has a high potential for growth. Similar to the process of finding angel investors, you can look for venture capital firms online and set up a meeting to pitch your idea and business plan. Amongst the most popular VCs in Egypt is Endure Capital, which is an early investment fund headed by entrepreneurs that funded a few of the most innovative startups in Egypt like Edfa3ly and Shezlong. Venture capitals will either find you or have you find them through their online social media platforms.
As presented, there are different fundraising strategies that a startup can use. Your business plan should help you decide which approach best suits your needs. If you are not sure about your long-term plans yet, you should avoid pursuing venture capitalists or angel investors because they expect a serious long-term plan that gets down to the brass tacks. In that case, raising money through your inner circle or one of the many crowdfunding platforms out there is your best bet.