The first step is to do your research. There are a number of different funding bodies in South Africa, but they all have different mandates. You need to recognise a funder that is currently interested in the medical space. Do online searches, join networks and get out there. Meet people.
Speak to fellow entrepreneurs and people within the medical field and ask them to introduce you to players within the industry that could give you advice.
Doing market research will also assist you – who are your competitors and how are they funded? What are their pricing points? You will need a fully comprehensive business plan before you approach any funder.
However, most funders and financiers will want to see that you have either raised some capital yourself, or have some form of surety. A bank is unlikely to give you a loan with out surety, as you are far too much of a risk.
Venture capital firms and angel investors will also see you as more serious about the business idea if you have put your own money into the business as well.
You will also need to demonstrate the following when you approach a funder:
- The ability to demonstrate convincingly why you can best execute on the business thesis – you need to have done their research and considered every angle.
- A sound business thesis and business model with appropriate potential are paramount. Can you demonstrate low costs, high leverage, the ability to scale exponentially, and how you will tap large hungry growing markets?
- There are endless possible deal-breakers, so be aware of them. IP issues can pose a big problem. Be prepared to answer these questions in your pitch.
- Finally, do your research. Different funders have different focuses. If you pitch to the wrong firm, and your business does not suit their mandate, you will get a no – and a poor reputation to boot. When you go back with a good fit, you might even be ignored based on poor pitches before.
What do I need to do in order to get a successful crowd funding campaign?
Advice on getting the gold you need for your crowd funding campaign.
I recently read through crowd funding and though this might be of benefit to me. What do I need to do in order to get a successful crowd funding campaign?
70 percent of most crowd funding campaigns never reach their funding laid out plan. If you only reach a portion of your desired pledge amount all donated funds are then returned to investors once your campaign date is up. Do your homework and make your campaign count.
To get the best out of your campaign, I would strongly advise you do the following:
- Lay out your plan way in advance
- Keep a proper and well-articulated business plan
- Create a compelling story.
- Use the social media and start a social media campaign
- Frequently promote your fundraiser, connect and interact
- Dish out rewards and incentives
- To go viral, go for educative, informative and entertaining videos
- Be more than unique and creative as more exposure will translate to more potential pledges
- Choose the right crowd funding site for you.
- Know and understand your end target audience
Where can I turn when banks are not helping?
Getting bank finance for my restaurant is almost impossible.
Getting bank finance for my restaurant is almost impossible. How else can I access the funding that I need?
Most small businesses will experience a cash flow challenge at some point during the next 12 months and raising capital from traditional banks is becoming a real challenge. Conservative lending policies and onerous application processes mean that finance applications can take up to twelve weeks or longer.
Banks require significant securities, which many business owners are unable to meet. In short, banks are making it very tough for small businesses.
The business cash advance
For businesses that accept credit or debit cards as a form of payment for their goods and services (termed merchants), the business cash advance is now available as alternative source of funding.
In simple terms, a business cash advance offers the merchant an upfront advance to buy a discounted amount of future business turnover. For example, you may be advanced R80,000 for R100,000 of future turnover, so the fees can be easily calculated as R20,000.
The payback is an agreed percentage of your turnover, paid daily until the full amount is paid across. Payback increases and drops with your business turnover and the smaller daily payments are often easier than monthly fixed instalments.
Quicker turn-around and more accessible
Comparing it to a bank loan, the business cash advance is more accessible, operates over a shorter term and requires no personal security. It is also much faster, typically available within two weeks.
The advance amount is based on historical credit and debit card sales and pay overs are daily. The costs are fully transparent and there are no penalties for late payments or extended payback. However, accessibility, flexibility and convenience come at higher cost than traditional bank lending products.
As with any financial product, it is important that the benefits gained from using the money are more than the costs, so it is important to have a good purpose for the funding and carefully consider the available options.
Over the last three years, the business cash advance has becoming more main-stream and this funding is used by business with a relatively high card turnover, such as restaurants, retailers, beauty salons, supermarkets, convenience stores etc.
What to use the advance for
The advance is typically used for a business opportunity, such as expansion, new stock, new equipment, marketing etc. Alternatively, it also offers through a difficult trading period or to cover an unexpected expense such as equipment failure when the money is needed quickly.
Small businesses are a vital part of the South African economy, contributing over 65% of South Africa’s employment and over 50% of GDP – accessing funding is imperative for these businesses to survive and grow.
Am I stupid to turn down a VC investor?
Bootstrapping your business initially will pay dividends down the line.
I’ve started my own business two years ago and I’ve recently been approached by venture capitalist investors. While I could really use the funding, I’m reluctant to give away a large portion of my business at this early stage. What should I do?
While it’s exciting to be approached by investors at any stage in your business, in the early years it might be better for the business to keep it small, keep your overheads low and bootstrap your venture as much as you can. This not only allows you to build a viable business and product offering at your own speed, it means you can to do without creating a huge amount of debt.
By building a sound and profitable business model from the outset, you will attract more attractive funding offers down the line.
Read the full article here.
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