How to Raise Capital for Your Business (Even If You’re Starting from Zero!)

Hi, I'm Dr. Natalie, and today we're talking about raising capital. I feel like this is such a exciting topic. Raising capital is one of the things that I get asked about a lot, and I think a lot of entrepreneurs think capital is their number one problem. So the first thing I always say is capital is not your number one problem. You have other things to first deal with before you're ready to raise capital. When once you get to the stage where you want to raise capital, there's typically like a way that you go up the hierarchy of looking for funds, right? So at the beginning, you always want to use your own savings first because it proves that you have skin in the game. You have a level of desire and execution. It shows that you have the discipline to save something, the commitment that you believe in this business, and it also helps you to test out things without using anyone else's money. So if you can use your own savings first to test your theory, proof of concepts, get your business out there, and to be clear, that means sell a product or a service, at least have one customer who has paid for your idea, then you have a business. If it's just an idea, you're now in, like the seed capital stage, but it's more of a concept. And it's very hard to get funding for an idea. If I'm honest. I think once you've proven your idea has potential, you know that there's people who are willing to pay for this service or this business or this product, then you can now start to look for money. So. So after your own savings, it's usually important to get some money from, like your community, your friends, your family. They say friends, family and fools, the people who you can borrow money from. And it's not a big deal if you don't pay them back, you're not going to go to jail, you know. So these are the people who you want to approach in a formal way. Don't wait for Sunday lunch and then ask your uncle for a loan. Casually ask for an appointment, have a business plan that's not 30 pages, that's something summarized. Show them that you're serious, you're organized. This is how you're going to execute. This is how you're going to pay them back so that they take you seriously and believe in you. The reason you stick to that small community at the beginning is because they don't know about your idea. They don't know if your idea is even going to work, but they're betting on you as a person. So you need people who know you, who know your integrity, they know your potential, they know your creativity. They can bank on you as a person figuring it out. Because any business is not going to go according to the plan. There's going to be ups and downs. And what people are investing in is your ability to navigate that to get the business to the point where it is successful. After that, you should have enough to have proof of concept. And now you have traction. So traction is where you have actual sales and customers and you can see month to month, am I growing? Am I moving forward? Are the sales going up? Do I have staff? Have I got the accounting done? Have I filed for taxes? Like now I'm becoming a real company, I'm growing, I'm making progress. That's the traction. Once you're in that stage, it's now easier to apply for soft money. So things like grants. Grants are hard to get because the process is so competitive. There's so many different companies that are also looking for that money because you don't have to pay it back. And the applications are long and extensive, if I'm honest. But a lot of grants come with support. So the organization that will give you the grant will come with advice and with mentorship or like put you in an incubator program or have someone that checks on you and trains you. So it's also very useful. I think sometimes with grants, the downside of grants is there's a lot of monitoring and evaluation. And I say downside, not that it's a bad thing, but it's more work for you as an entrepreneur. So when your business is still in an early stage, you don't have enough resources. Whether it's people, it's money, it's time, it's energy. So you're really like already doing a lot. So you have to also consider, am I going to be able to do all the accountability that this grant is going to require? Am I going to be able to attend all the trainings that they're going to make me attend all the meetings? And will I be able to like present this paperwork, these receipts, this follow up for everything that they know? And it was such a competitive process. It was difficult. It was so many like online applications, applications and I think even videos we had to submit. But they were such a great partner later because they held workshops, they took us through different processes, they brought in different trainers and it really helped us to expand how we were thinking and what we were doing. And you also meet other companies that are at the same stage. As you. So there can be all these wonderful benefits that come from that. There's also crowdfunding, which is something we've tried. That one takes a lot of work. It's not as busy as it's seems. It can be useful because you don't have to pay it back and there's no M and E. But to get to your target can take a lot of energy and effort. I would suggest very good media for that. You need good photos, good story, good videos to get people to understand and connect emotionally to what you're trying to sell or what your business is and its potential. So you need to tell a really good story to make sure that people understand. I think something a lot of entrepreneurs forget is this is your baby. You, you deal in this business every day, but to the people you're talking to, it's the first time they've ever heard of this. So you really need to make things simple. You need to talk slowly. You need to take them through the process, the benefits, the challenges, so that everyone understands. And I remember being taught, imagine you're Talking to a 12 year old at best. Yes, you're speaking to the brightest and best minds when you're looking for money, but it's a new concept to them. So don't go too fast and don't make it complicated and add too many layers. Make it simple, make it clear, make sure people understand and grasp what you're trying to get to after that kind of stage is now when you're looking for investments which you're going to have to pay back. And now this is harder than the friends and family investments. So this is where there's harder like requirements. Banks will have what's called kyc, know your customer. So they're going to ask you a lot of questions. There's going to be a lot of paperwork you have to submit at this point. You need to have a legally registered business, you need to be paying taxes. There's NSSF to consider. So there are many different things before your business gets to that decision stage. And it's your responsibility as an entrepreneur to know these things. You can't cry for Ura that I didn't know I have to pay taxes. That's not their problem, that's a you problem. So you need to make sure that you're in the position to go through these applications to make sure that you understand the fiduciary commitment that you're making. You are now personally liable for any money that you borrow, any money that you take and where it comes back and what happens with it. So there's also a level of accountability. They're also going to ask you questions, they're going to check up on you, they're going to check on the business, they're going to make sure that you're not lying and they're also going to push you and I think harder. Money like that doesn't come with the nice resources of the grants where they're supporting and mentoring you there. You owe someone money and it's your responsibility to pay it back. And you have to consider things like interest because it's not coming to you for free. And as your business grows, you understand more about debt like that. Then there's also like investments from like angel investors or like a VC where you give equity in the business, which means you're going to give a percentage of your ownership and they give you the money and then you run the business. That means when you make money, you're going to have to give them some of the profits, which is typically more than what they've given you in the long run. That's why it's their business to do that. When you have investors, you also have to consider their influence in the business. Do they have a particular agenda? Why are they investing in your business? What do they want you to achieve? Are they a board member for you? So you have to understand these kinds of things. And I think at every stage it's important to realize and understand what you are committing to. Cuz like I said, as the entrepreneur you are the one responsible. You can't cry ignorant to get this money and how you're going to execute to pay it back, to use it in the company to make a profit so that everything works out okay.