Overview of Business Funding Sources
Startup Funding
Best option usually by far is to self fund, then friends&family&wealthy connections, then funders. Self funding through organic growth (Anchor clients, solid sales&marketing process, stashed savings to carry you through the dip, using cashflow accelerator techniques).
In the long term leveraging capital and OPM (Other People's Money) is a major contributer to exponential growth, but when starting out for the first time, you will realise its very difficult to raise funding, and that the funding comes with a lot of strings attached.
Venture Capitalists
(Only in innovation, or in situations where 20x return or better is possible in 5 years, they like intellectual property)
List the specific ones I have dealt with
Business Partners
Government programs.
SPII, innovation fund, Khula bank guarantees.
Khula Bank Gaurantees
Khula is technically a government backed program and fund, that does not issue finance, but instead, provides sureity on behalf of the entrepreneur to the bank, in the form of a Bank Gaurantee. In other words, if the entrepreneur fails and is unable to repay the loan to the bank, Khula's gaurantee will make up the loss to the bank. Of course this means that Khula screens your business plan and financials (in the case of a new business), or your past financial statements (in an existing enterprise), extremely thoroughly.
Typically you need to have 10-20% of the capital in liquid,unencumbered (not borrowed), funds available, of the amount that you are applying for.
Private Equity / Buy out Funding
Bank Financing
Bank overdrafts (They look at turn-over, how long history)
Business bank loans, secured lending, commercial property, fixed income projects.
Letters of Credit, Bank Gaurantees.
Emergency Funding
Factoring your Invoices (?Sasfin? who else, credit gaurantee/scoring, discounting, may collect invoices on your behalf)
Business Loansharks and Bridge Financing.
Listing on the stock exchange
Smaller boards, Venture Capital Board/Development Capital Board, and now Alt-X
These boards almost always collapse locally and die out (many go kaput, many rip investors off through dodgy practices and the rest migrate to the mainboard), but dodgy smaller boards seem to sustain themselves long term internationally
Big story (Sponsor, Investment banking advisors, big 5 auditors, its expensive) Listing Criteria.
My experience of a listing - Bryant Technology.
Read up on the Business Ninja Techniques that I teach.
Find out about my 1-on-1 coaching services in Gauteng.
To post a comment:
Hi, Andries I wonder if you can help me with some information. I\'m looking for companies or gov funding organisations. I run a small woodworking company from a basement of a building in JHB. But I feel that if i could get a shop to display my products above-ground i could have enough exposure.Currently I\'m still struggling financially hence i need funders to help with this process. would you kindly refer me to any organisation. Thank Mr Malan Vusie Dlamini email:jabie@ananzi.co.za