From growth hacking to moving overseas, there is more than one way to raise money for your fledgling startup. Here are four alternative ways you can fund your startup.
This philosophy suggests making your business appear perhaps bigger than it really is will bring in some sales.
It’s an approach admired by start-up Pocketbook, an app that helps Australians manage their money. Co-founder Bosco Tan says growth hacking can enable a start-up to invest back into product development or marketing.
“Growth hacking is the fundamental way an entrepreneur thinks. It’s not an exact science, but it’s built on intuition and big ideas to find the market opportunity,” Tan says.
A perfect example is the way clothing brand FUBU used 10 shirts and leveraged relationships with hip hop stars to create the image of a million-dollar company, to then get orders for the shirts and started producing more.
The lesson is to create the image of a huge business, get paying customers, then solve the demand, he says.
“That’s the classic growth hacking mentality – testing the market before producing. We see this today in products like Pebble watch, funded by the same principle by Kickstarter. Start-ups are also building landing pages today based on this idea of getting interest,” Tan says.
Perhaps a more ethical and less risky approach is to simply convince a small army of supporters that your idea is worthwhile, which worked for many trying to get their start-up off the ground.
Ex-investment banker Kevin Jochelson, who’s behind soon-to-be-launched travel and entertainment start-up Fiestafy.com says funding from clients and customers is a great option.
A small amount from each can go a long way in those early days, he says.
“If you can get customers or clients to buy into your product early, you’ve proved the most difficult thing for any early stage start-up; that there’s a market out there,” he says.
This approach worked for startup cloud-based software application WayWeDo.com, which created a prototype and started pitching the idea to potential partners and customers.
Managing director Jacqui Jones says initial designs and programming was funded by sacrificing her wedding budget.
“Launching with a minimal viable product allowed us to get customer feedback to iterate the development further. Our advice to people who want to start a business is to pre-sell your idea to customers and use those funds to build the product or service,” she says.
“Funding from a grant, angel investor or crowdfunding source will certainly accelerate things. However, pitching to real customers or partners first will validate your idea, generate revenue and ensure that you’re building a product that your target market wants.”
If you fancy a move, there are opportunities to pick up grants overseas, with some countries keen to support newcomers looking to bring their start-up with them.
Sydney start-up Pop-Up Brands lists unused spaces for rent for just an hour, a week, a day or a month, which attracted attention from the City of Barcelona, which officials felt could be just the thing to revitalise tired parts of the city.
And while the business founders weren’t ready to take their business overseas until it was more established, the offer helped springboard growth and interest here in Australia.
The UK is also keen to support Australian start-ups. The UK Trade & Investment Sirius Programme has just opened, which invites graduate entrepreneurs to make the UK their home and receive a $20,000 funding package plus a place on a top start-up accelerator.
The first year of the program, in 2013, saw 40 successful teams of entrepreneurs relocate to the UK, including two Australians.
One of those was founder of innovative woollen sports shoe company ToBe, Jonathon Spanos.
“Being accepted into the Sirius Programme was much like receiving a scholarship to attend Oxford University. They provide you with a visa, a stipend, support for moving to the UK and a community of like-minded individuals to collaborate with,” Spanos says.
There’s certainly government support, if you know where to look. This website is a great resource to see what you’re eligible for.
But also take a look at private entities, local government and community organisations within your area, as there are countless programs out there to help start-ups find their feet in those early days.
Female entrepreneurs should check out Forming Circles, which runs a Kickstart your Business Grant program every six months. It gives away $5000 cash and over $5000 in mentorship value to a winning business.
Forming Circles CEO Renata Cooper says that mentorship will give the successful applicant invaluable support and guidance that will help accelerate their growth.
