Q

Where can I access funding for my startup company? A very common question as you might imagine. There are options available to startups, but they all have their own set of conditions. I assume that your strategic plan is complete and polished to a high degree of fluency? And of course your business plan is a thorough assessment of opportunities and risks. Now you just need someone to tell your story to. I will give you some ideas how you can get this new venture off the ground. Throughout the article you will find highlighted links to more in depth coverage of a topic, perhaps in another post.

You have thought about it long enough and now it is time to get some traction. Some start up money to get the first tasks done and to start feeling like you have a business. Immediately let’s forget about banking institutions of any kind. Banks are not in the business of financing startups, and they also don’t see themselves as your sole source of funds. When the time does come to talk to the banks, you will want to show them that you have utilized other sources to get to where you are at that time. That you have already sought out and utilized other sources of funding begins to paint a picture of a proactive business owner.

Step 1. Pitch your friends, relatives, neighbours, co-workers, as well as anybody else that you know. You must already know these people to some degree, and they should know you. At the very least by name when they meet you at a random occasion. In some jurisdictions it is a legal requirement that a private business, or private corporation, only solicit investments from closer acquaintances with whom some form of relationship existed before the “pitch.” But outside of that possible requirement, there are other excellent reasons to approach your personal network of acquaintances.

It is a great opportunity to get honest and critical feedback from your personal network. Accept the critique you receive with open and enthusiastic acceptance. First of all, it is valuable. You will here these points raised over and over as you build your company. You will need to be able to respond to all of the negative comments showing your awareness of this particular issue, and your preparedness. The time to become aware and prepared is now. Not when you are standing in front of an “Angel” group answering questions.

Step 2. Crowdfunding offers some interesting opportunities to present your business. There are crowdfunding platforms which offer the opportunity to pitch your business ideas to smaller funders. These platforms are especially well suited for start up tech companies with smaller user friendly products such as designer watches, pens that write in zero gravity, or mini cameras that fit on a pen in your pocket. Smaller items that an individual might find interesting for their personal benefit. They might be interested to see your product on the market, and perhaps be willing to throw a couple hundred dollars into your venture for some small return, or a couple of the products even as a gift!

Then there are more sophisticated platforms which give you the opportunity to present your business to real investors. Investors that are paying to be on the platform and want to look at business investment opportunities. And yes, you pay for these opportunities too. This is why it is good to have a few friends along for the ride. Share the burden of the work. If you join a sophisticated network it means work and a subscription cost. You will post a business plan probably under a format used by the platform. This means writing or copying parts of your existing plan into the platform. Then making contact with the potential investors and working with interested lenders. Each platform has its own rules and features. Compare them carefully and consider which would best serve your business interests. I will prepare a review of several of them in a subsequent post.

Step 3. There are always the “Small Business Development Programs” offered by various ministries of the government. I can use some Canadian examples to help you identify similar entities in your area.

  • The Business Development Corp (BDC) – They describe themselves as the “bank for Canadian entrepreneurs”. And although they do offer some great mentoring, they are very much a “bank” with all of the stipulations that go with the banking industries. I strongly advise entrepreneurs against placing any kind of incumbrance against their properties which are unrelated to this business. This is why I suggest you raise initial funding and get your business off the ground to some degree before approaching the banks, even banks like the BDC. You need some equity that can offer a feeling of security to the bank. https://www.bdc.ca/en/about
  • Innovations Canada – “We Back Big Ideas” is a bold introduction as for what to expect. Do you have a “big idea?” They continue on saying they “helps Canadian innovators who want to start, grow, and get to market, by funding R&D and testing prototypes in real-life settings. ” If you have a product concept that you know is a game-changer, or a disruptive technology, then this is a great place to start. They will certainly be able to offer you excellent qualified advice regarding your concept. https://ised-isde.canada.ca/site/innovation-canada/en
  • Canada Revenue Agency (CRA) – In Canada, the CRA is an asset to new businesses that is often misaligned. I encourage, right from the start, that you think of the CRA as as partner in your business. In reality, they are! One investor, in answer to a question I asked about his companies, told me to “never let my company exceed $100M in gross revenue or the CRA would be my new 50% partner.” I must admit that I never encountered this problem in my company. But I have often experienced a co-operative, interested attitude from the CRA in response to the many times I have called them for information or clarification of some activity. As an example I was seeking to bring a retirement investment from a US fund to a Canadian fund without paying withdrawal taxes. After speaking to different financial advisers and receiving 3 different approaches, I called the
    CRA and they explained exactly how to do what I wanted. To be clear, the Canada Revenue Agency wants you to succeed! They receive a share of your profits, which gives your business the legal right to do its activities in this country. They want you to profit. There is a wealth of information to be found at CRA Business Starter.
  • What is important about these organizations, is that they are not in any way competitive to you. They will not misuse your trust by divulging your technology to others or using your information for their own gain. Their objective in all of these examples is to see your success. Do some research. I am sure that you will find there are other agencies depending on your business that will offer steerage and resources.
HOW TO START A COMPANY – With No Money
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