Startup entrepreneurs: five practical tips to get the funding you need

Your business model and plan are works of art. Your financial projections have been meticulously prepared. You’ve put the finishing touches on the pitch deck you’ll use to present your business to potential investors.

Prepare carefully before you meet with a bank. You need to be an expert about your business model and plan, right down to the tiniest detail, and be able to answer any questions that come up. Your potential investors need to understand the risks that come with your new business and how well your business model and plan can stand up to these risks.

There are also other ways to optimize your first-meeting prep. For example, anticipate potential objections so you can master the answers. You might even invite a specialist from your field to come along to explain the complexities of your expertise to your audience.

The financing application provided by your lending institution completes your preliminary business plan, and fleshes out the nature of the project you’re seeking to finance. The business plan needs to explain the positive impact that your desired financing will have on your business’ growth. Purchasing a piece of equipment or machinery that enables you to reduce your cost per unit is an example of a positive financial impact that will pique an investor’s interest. Demonstrate that you’ve thoroughly prepared your application—it’s your pass to get to the next level with your business. 

Your financing application will be assessed using various criteria:  

• Previous professional experience

• Risks associated with your specific business sector

• Guaranties offered to compensate your investor for their risk 

• The business’ ability to pay, and the personal financial history of the business’ leaders (from a bank’s perspective, a previous bankruptcy may be seen as affecting your credibility and credit)

Surrounding yourself with the right people and meeting your bank’s requirements is imperative at this stage. Having a strong team behind you helps spread the risk and put your business partners at ease. Build a team of true professionals that have complementary skills to yours. A mentor can help guide you in terms of thinking strategically about your business, while a lawyer can clarify the legal aspects of your endeavour—for example, incorporation. An accountant—and their experience—is worth their weight in gold! You could also take advantage of a wide range of expertise that complements your own by setting up an advisory board to guide your strategy.

In terms of sources of financing, there’s more than one way to get funded. Generally speaking, you can finance your endeavour using loans, equity, or grants and subsidies. You can often meet your financial needs with a financing package that combines various sources in order to provide the liquidity you need.

Combinations include:

• Use of personal funds

• “Love money,” meaning seed capital provided by family and friends  

• Crowdfunding

• A grant from the government or an organization that supports entrepreneurship and economic development

• A loan from a private organization or financial institution

Using personal funds is often necessary if you seek to obtain a bank loan or governmental financial assistance. In any case, investing some of your own cash is highly recommended because it demonstrates how serious you are about your new business. 

Venture capital firms and angel investors are usually attracted to young businesses with significant growth potential. In addition to financial assistance, and to reduce the risks they face through investing, these bodies often also provide strategic coaching. As a result, you get to benefit from their advice, networks, and experience—it’s a great match if your idea meets their needs!

You’re passionate about your business idea and you could talk about it forever! Yet you also don’t want to waste a potential investor’s time with a meandering speech. Your goal? To help them quickly and clearly understand your project.

Here’s what you need to include in your pitch if you want to impress:

• Know your business model and plan, right down to the tiniest details.
• Explain why they should finance you. 
• Demonstrate that you’re an expert in your field and understand its risks, and its opportunities.
• Show your product’s or service’s market traction using data.
• Illustrate your unique selling proposition (USP), and your action plan to surpass your competitors.

Here’s our final tip for an effective and professional pitch in the meeting that matters: Repetition. Practise your business pitch repeatedly on people you trust to be honest with you. Ask them to put themselves in the shoes of your potential investors, and then convince them of your merit. Someone you trust will be able to help you sharpen your pitch, from what needs to go (are there too many technical details?), to what needs more explanation.