What is Start-up Funding?
If you want your start-up business to succeed, you’ll almost certainly need money to get there. Unless you have a massive savings account, you will need to find some funding. Start-up funding can take many forms, ranging from small contributions from friends and family to large investments from large investment companies. There is something for (almost) everyone.
However, getting funding for your start-up is not always easy, and sometimes you might have to give up some control of your company in exchange. On the other hand, getting a investment could be exactly what your start-up needs to take off.
So, where do you find funding for your start-up?
Venture capital finance
This is where private equity capital is used as seed funding for high-growth, high-potential businesses. The South African Venture Capital Association (SAVCA) website has a comprehensive list of venture capital and private equity firms. Some funders will provide funds specifically for R&D, while others will assist you in financing your business so that your product is ready for market.
Government departments and agencies
Numerous government departments and agencies aid new businesses, ranging from small loans of a few thousand to loans in the millions.
The following government agencies should be approached:
- Department of Trade and Industry
- Industrial Development Corporation
- National Empowerment Fund
- Small Enterprise Development Agency
- Small Enterprise Finance Agency (SEFA)
- Technology Innovation Agency
- National Youth Development Agency
- Isivande Women’s Fund (IWF)
Some provincial and local governments and municipalities, such as the Gauteng Growth and Development Agency (GGDA) and the Western Cape Department of Economic Development and Tourism, aid businesses. You can seek assistance from your province or metro, and be sure to follow them on social media, as they frequently announce programs on these platforms.
You can also approach government departments such as the Department of Agriculture, Land Reform, and Rural Development, the Department of Sports, Science, Art, and Culture, or the Department of Tourism, depending on what’s relevant to your business, as they frequently have programs in their respective sectors.
Angel investors
Angel investors are typically wealthy individuals who lend money to individuals and businesses with promising business ideas. Some international angel investors may be familiar to you from television shows such as Dragons’ Den.
They usually want a stake in the company, and many are willing to invest in companies that have potential but do not qualify for a bank loan. There are numerous angel investors in South Africa, such as Jozi Angels. Remember that you are not limited to raising funds only in South Africa. You can also search for international angel networks.
Crowdfunding
Crowdfunding is one of the newer ways to fund a business, and it has recently become a popular option for raising funds for start-ups. Instead of raising a large sum of money from a few sources, you raise small sums of money from many sources, which not only provides you with funds, but also a way to validate your product.
South Africans can access crowdfunding websites such as BackaBuddy, Thunda Fund, JumpStarter, and Uprise. Always inquire about any additional fees required to access platforms as well as the exact terms and conditions of the finance and support provided.
Bank loans
Surprisingly, there are several banks in the country that provide loans to SME’s. Banks such as Nedbank, Standard Bank, and FirstRand Bank Limited provide capital to entrepreneurs who have good ideas with a bright future. However, each of these banks has established criteria that any prospective borrower must meet before such an opportunity can be accessed.
Furthermore, banks make loans at a fixed interest rate that must be repaid at the agreed-upon rate. So, find out what the requirements are and how you can take advantage of such opportunities.
So, what are you wanting for? Go out into the world and make your dream a reality.
With so many options available, it’s worth attempting to get your business the funding it needs. You may have to deal with a lot of paperwork, so prepare yourself, but remember that once it’s done, you can start growing your business.
“A dream does not become reality through magic; it takes sweat, determination, and hard work. – Colin Powell” – Colin Powell