5 Funding Options To Raise Your Startup Beyond Bootstrapping

2019-06-12

TLDR: Multiple funding routes exist for your startup – some better than others. Whatever option you choose for investment it requires a lot of time and perseverance. Centuro Global can help you along the way with mentorship as well as access to investors and exciting competitions with 6-figure prizes.

No. 1 Ingredient For Survival.

No matter the idea, no matter the team and no matter the market, the most critical requirement for any startup to succeed over time is cold, hard cash. With the need to compete intrinsically linked with the need to grow, there comes a time for every ambitious startup to look externally for funding.

Hacking together an MVP, proving market demand, bolstering up your business model – the brightest teams will often learn to thrive off a shoestring budget, but bootstrapping can only get you so far.  Capital is the number one irreplaceable ingredient for business survival. With sufficient funding, any team can be improved, any product can be developed, and all processes can be scaled.

There is a growing desire among young startups to sell off large chunks of equity to the highest or (even worse) first bidder. If you’ve created something worth investing in, it’s in everyone’s interest to find the ideal funding option for your startup.

Here are a few tips on the route to raising you can adopt:

(1) Bossing Competitions
Probably the most exciting way to raise capital is through winning contests. The UK has some of the best competitions for you to win some capital, often without having to sacrifice equity or months chasing investors.

Pros –

• The best contests often hold or attract media coverage to boost your startup’s publicity.
• Equity-free prizes
• Pitching practice
• Feedback opportunities

Cons –

• Stages tend to be quite high-pressure.
• Requires a lot of confidence – participation often requires fielding public criticism and getting ‘grilled’ by a panel of judges.

We love a good competition at Centuro Global, which is why we’re hosting a unique pitching battle in October. In true winner-takes-all style, there’s going to be a £100,000 equity-free investment up for grabs. Find out more and apply here.

(2) Crowdfund Like A Champ

There’s an ongoing debate around the best crowdfunding platform right now. Kickstarter, Indiegogo, Seedrs & Crowdcube are probably the top four in the UK, depending on whether you’re selling a product, service or platform. Every crowdfunding platform has its quirks and own approach, but whichever one you choose, there are a few universal advantages and disadvantages to communal capital.

Pros –

• Creating a buzz. The best campaigns whip up the most public attention and will raise finance through new-found customers, not just investment!
• Proving market demand through crowdfunding is an increasingly attractive ‘tick in the box’ for future VC investment.
• Leapfrog any inexperienced competitors getting bogged down in intricacies involved in bringing an investor on board.

Cons –

• Oversaturation is beginning to take effect on crowdfunding. There are dozens of crowdfunding platforms and thousands of startups jockeying for capital on each. Standing out to the crowd can feel like luck more than judgment.
• Not as hassle-free as expected – again, due to the enormous popularity of crowdfunding, to successfully execute a campaign takes a lot of hard work and ‘man hours’. Often, missing out by just a few hundred pounds can mean you get no return on your efforts.

(3) Incubate Then Accelerate

Let’s agree on a quick fact right away: London’s startup ecosystem isn’t Silicon Valley. We don’t have the funny TV show, we don’t have the accelerators, and we certainly don’t have the weather.

That isn’t to say there are no options if you’re looking for assistance beyond straight cash injections. London is home to some truly world-class accelerators and incubators: Techstars, Seedcamp, Wayra, and FoundersFactory are just a few of the many well-established options.

Pros –

• Becoming part of an ambitious community is exciting.
• The mentorship and connections available at the top accelerators can be valuable.

Cons –

• Often, surrendering equity is required just to join – low valuations and low returns are inherent risks.
• With so many new accelerators, startup founders are increasingly feeling like they’re being ‘sold a dream’ when hunting for the best opportunities.

At Centuro Global, we don’t consider ourselves as an accelerator or incubator – we’re striving to be something much better. By doing away with a reliance on ‘boot camps’ and requiring participants to inhabit specific office spaces, we know we can offer the most flexible and effective service (business > beanbags…)

(4) Secure Angel Investment

An ever-popular option, angel investors can act as individuals or groups called ‘syndicates’. This is the best option we’ve mentioned so far to start tapping into some ‘big bucks’ investment.

With great tax-relief schemes in the UK, there’s never been a better time for high net-worth individuals to invest funds into promising startups.

Pros –

• The best angel investors act as an advisor as well as a capital provider.
• Access to more substantial & flexible investment amounts without needing to sacrifice control or equity.

Cons

• It can backfire if you choose the wrong angel.
• When considering funds available, giving equity to an angel investor can be a lesser option compared to venture capitalists.

(5) Strap-In to a VC Funding Rocket

Venture capitalists (VCs) can offer the most significant investment amounts short of IPO’ing your startup (and since you’re reading this, you probably aren’t looking to IPO any time soon…)

VCs are funds managed by experienced professional investors continually looking for the best opportunities to invest millions of pounds into.

Pros –

• VCs possess the largest funds.
• Teams of professionals will scrutinise and improve your business with an eye to a quick and successful exit within 3-5 years.

Cons –

• The determination for a quick exit means receiving VC funding can feel like being ‘strapped to a volatile rocket’. It will either take your business to unprecedented heights or crash and fail very quickly.
• VCs have stringent prerequisites to investment – very few startups meet the requirements for funding, and even fewer can demonstrate they know how to use it. This takes VCs out of reach for the vast majority of startups

(6) BONUS: Not Mentioned Options:

• Bank Loans: Great for quick cash injections, although not for the faint-hearted.
• Government Programmes: The potential for substantial funding if you have the patience and diligence to secure them.

In conclusion,  there are numerous considerations and potential pitfalls to every funding option. Even the most experienced entrepreneurs can struggle to source investment and then trip up just before or after raising capital. Centuro Global specialises in helping startups attract funding and helps put proven models in place to make the most of your available capital and equity. Find out more today.