Over the years we’ve learned that there is plenty of money out there for good ideas and if your idea is sufficiently developed to a stage where you have paying customers and you need investment to keep up with demand and scale the business, then there is plenty of money out there.
As a general rule (not in every case) investors are looking for high growth opportunities that can scale. Where you have done the work to validate your solution and customers are buying your product. We call this a product : market fit. It’s at this point you are on your way to becoming investable. Until then though there are a number of means for which you can raise money, to develop your idea (validate your idea with the market). The following is a list of funding ideas and options which you might consider along the way.
The harsh reality is that when you are first starting out often there is only a number of options available to help you get your idea off the ground. Often early stage capital to get started comes from what is referred to as the 4 “F’s”
- Founders – You.
Savings, working a job, credit cards, a personal loan, selling your stuff online (we’ve done it),
Borrowing from the friends that love you and believe in you can be another great means to get the money you need to get started, or inject the money you need to keep going
Similarly, to friends, leveraging the love your family holds for you to borrow money to get started is another highly used means of finding the money to get started.
- Fools – Haha
This is meant to be a bit of a joke, but at the same time “not really”. If you can convince someone to invest in your concept when it is at the idea stage, good for you. It’s not common, because it’s considered the ideas are worthless (despite how amazing you might think it is), it’s not until your concept has been validated that an idea begins to retain value. Early stage ideas are often considered too high risk to invest in.
Of course there are exceptions to everything, but this is generally considered to hold fairly true.
Other great early stage means to raise money is “Crowdfunding”. Crowdfunding is a great way to both validate your product in the marketplace and raise early stage capital to help fund the development of your idea. Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people. Crowdfunding is a form of crowdsourcing and of alternative finance. In 2015, it was estimated that worldwide over US$34 billion was raised this way. Wikipedia
The following are a list of some of the most popular crowdfunding websites.
Kickstarter – https://www.kickstarter.com/
Pozible – https://pozible.com/
GofundMe – https://au.gofundme.com
Indiegogo – https://www.indiegogo.com/
The following are a list of successful local crowd funding campaigns:
Post mining boom, all levels of government have become extremely aware that if Australia > Queensland > Our regions, are going to remain relevant then they need to provide programs to support the development of new ideas into businesses.
The following are an introductory list to available grants / programs that the government has available to assist you in developing your idea.
Local Government Grants
Tablelands Regional Council Economic Development Grants – http://www.trc.qld.gov.au/business-industry/economic-development-fund/
Mareeba Shire Council Grants – https://msc.qld.gov.au/grants-and-sponsorship/
Queensland Government Grants / Programs
$405 Million Advance Queensland – http://advance.qld.gov.au/
$40 Million Business development Fund – http://advance.qld.gov.au/industry/business-development-fund.aspx
Ignite Ideas – http://advance.qld.gov.au/industry/ignite-ideas-fund.aspx
Federal Government Grants / Programs
Up to $1 Million Commercialisation Australia – https://www.business.gov.au/assistance/accelerating-commercialisation
$1.1 Billion Ideas Boom – http://www.innovation.gov.au/
R&D Tax Inventive – https://www.business.gov.au/assistance/research-and-development-tax-incentive
Accelerator Programs are excellent programs to support promising early stage ideas. Typically, accelerator programs have the following criteria:
– They have a time frame ie: a distinct beginning and end. Generally, 3 months.
– They exchange equity for seed capital. It varies from accelerator to accelerator but an example would be you’d give up 6% equity for $20,000 in seed capital
– You become part of a cohort (small group) of other startups
– Accelerators have extensive mentor / industry networks which can assist in accelerating the development of your idea
– Accelerators often measure their success on the amount of follow on capital that is raised in their cohort beyond the accelerator program. So it’s their job to connect you to investors
– Generally they require you to move to the location of the accelerator for the duration of the program
– There’s more…
The following are a list of some of the accelerator programs around Australia
iLab Germinate – http://www.ilabaccelerator.com/programs/ Brisbane
Rivercity Labs – http://accelerator.rivercitylabs.net/ Brisbane
Creative Enterprise Australia – http://qutcea.com/fashion-accelerator/ Brisbane
Startmate – http://www.startmate.com.au/ Sydney
Muru-D – https://muru-d.com/ Sydney
Blue Chilli – https://www.bluechilli.com/ Sydney
Pushstart – http://pushstart.com.au/ Sydney
Ignition Labs – http://ignitionlabs.com.au/ Sydney
Excelinc – http://www.excelinc.com.au/ Sydney
Angelcube – http://angelcube.com/ Melbourne
Venture Funding Rounds
Once traction is achieved we start moving into the investment territory. For a general understanding we can break financing into the following rounds:
Seed round – where company insiders provide start-up capital
Angel round – where early outside investors buy common stock
Series A, Series B, Series C, etc. Typically, Series A round is the name typically given to a company’s first significant round of venture capital financing.
We covered the seed round options fairly extensively earlier, the following is a look at the Angel Investor networks within Australia.
There are emerging and established networks of angel investors throughout Australia. Such investors often help bridge the gap between seed rounds and venture capital rounds. Often angel investors are high net wealth individuals, successful entrepreneurs or groups of the above. The following are a list of some active angel investor networks in Australia:
Brisbane Angels – http://www.brisbaneangels.com.au/
River Pitch – http://riverpitch.com/
Sydney Angels – http://www.sydneyangels.net.au/
Australian Investment Network – https://www.australianinvestmentnetwork.com/
Innovation Bay – http://www.innovationbay.com/angels
Capital Angels – http://www.capitalangels.com.au/
Melbourne Angels – http://melbourneangels.net/
Scale Investors – http://scaleinvestors.com.au/
Business Angels – https://businessangels.com.au/angels.php
Perth Angels – http://www.perthangels.com/
Venture Capital Investors
Venture capital (VC) is a type of private equity, a form of financing that is provided by firms or funds to small, early-stage, emerging firms that are deemed to have high growth potential, or which have demonstrated high growth (in terms of number of employees, annual revenue, or both). Wikipedia
Big Wave Ventures – http://www.bigwaveventures.com.au/
Artesian Invest – http://www.artesianinvest.com/
Blue Sky Capital – http://www.blueskyfunds.com.au/
One Ventures – http://www.one-ventures.com.au/
Black Bird Ventures – http://www.blackbird.vc/
Avcal – http://www.avcal.com.au/
ASSOB – https://assob.com.au/
If you have any questions regarding capital raising and where to start, please book a 1:1 session with our startup & innovation coach [email protected]