Find the most fitting funding channel for your business
Entrepreneurs need to thoroughly research and select the most appropriate funding channels for their business. They must establish the specific criteria in order to apply.
Funding institutions, especially larger Development Finance Institutions (DFIs) such as the Department of Trade and Industry (DTI) in SA, have numerous categories of financial and business support for entrepreneurs. So spending time finding the most appropriate options for your business is vital.
Bear in mind that
- Some only support small businesses in a particular industry sector – typically, priority economic sectors
- Others only support businesses at a particular stage of growth
- Some just provide just capital
- Some require the entrepreneur to pay back the funding over time
- Others do not (usually grant funding)
- Some provide mentorship and get involved in growing the business together with their financial investment.
You should be prepared to spend a lot of time getting all the necessary documentation together. Depending on the criteria specified, some or all of the following may be required for the funding application:
- Proof of type of company e.g. CIPC registered company, closed corporation, sole proprietor, etc.
- Proof of ownership and shareholding
- Proof of address
- Proof of SA citizenship
- Certified ID of all directors/ members/ staff
- Certified financial statements
- Management accounts
- Valid SARS tax clearance certificate
- Other SARS documentation
- VAT registration document (where applicable)
- Bank statements.
The pitch to your prospective funders
When pitching for funding to any institution or individual, there are key criteria that Seed Academy recommends to its entrepreneurs:
- Be extremely conservative in the financial projections presented to the prospective funder
- Be fully prepared to explain exactly where the figures are derived from and be able to support this with evidence
- Show your funders that you have an in-depth understanding of the business and the competitive environment in which you are operating
- Be able to answer questions such as: What sets your business apart from other small businesses offering similar products or services? What are your differentiators? What can you provide that no other business can?
- Know what the expected return on the investment for the prospective investor will be
- Be extremely clear on the expected repayment period and terms
- Have a proof of your concept or your most viable product
- Be able to show an existing and ideally, a future customer base.
Engage your audience, don’t bore them
Try not to exceed 15 slides in your pitch presentation. Don’t bore your audience! They will be sitting through many presentations for the same pot of money. Practice your presentation beforehand.
The guidelines allow investors to see that the business idea has been thought through, that the business environment has been considered and that the entrepreneur is willing to sacrifice to make the idea work. This will serve to allay some of the fears of investors and enable the entrepreneur to create a strong first impression that could open the doors for meaningful funding discussions.
Entrepreneurs must be able to show their prospective investors that they are equipped personally and professionally to be a determined business owner.
A good business idea is vital, but the entrepreneurial journey comes with many unforeseen challenges. You need to demonstrate that you have the tenacity and determination required for success.
Entrepreneurs are the job creators of the future, don’t give up
Patience is critical. If a funding application is not successful first time around, learn, fine-tune your approach, and try again.
At Seed Academy, we believe entrepreneurs are integral to economic growth and are the job creators of the future. With the right training, support and funding they can build successful, sustainable businesses. Entrepreneurs need to be equipped to build successful, scalable business and to become the job creators of the future.