Every business needs money. There are several ways for you to raise money, whether your company is well established or just getting started. This article will discuss what you should know before fundraising and contains a special webinar recording with insights from industry leaders.
Prior to Fundraising
It's crucial to understand why you're trying to raise money. Therefore, it is advised that business owners intending to raise money comprehend how their finances will be utilised. This may both aid in your understanding of your fundraising goal and persuade potential investors to back your company.
Before attempting to raise money, you should do the following things:
- Verifiable and accurate financial records from your company's history and current
- The business plan
- Your plan for using the monies obtained in business
- Being aware of your key hires and more
- Additionally, you have to be prepared to devote time and energy in managing your investors. We advise diversification to various investors, despite the fact that some people would choose to obtain just 1 particular investor to reduce conflicts and time commitment.
Discover why below.
What kind of investors should you work with:
In Singapore, one of the most popular ways for a business to obtain funds is through angel investment. An angel investor is a rich person who is willing to fund new companies or enterprises. They invest their money in start-up companies with a high level of risk in return for a stake in the firm. Angel investors may operate alone or as a member of an angel network. In Singapore, a single angel investor may raise between $25,000 and $100,000, although angel networks may provide substantial sums of money.
Venture capital is funding provided by investors (venture capitalists) to aid in the launch or growth of a business. Venture capital companies that specialise in building high-risk portfolios supply these funds. Venture capitalists offer advice on how to boost a company's profitability in addition to money. When investing in a firm, venture capitalists anticipate a high rate of return, with an average estimate of 25%.
Accelerator/Incubator for Startups
Early-stage startups might also try to enroll in incubator/accelerator programs. Incubators and accelerators frequently provide start-ups with coaching and investment, similar to venture capitalists. This is a simple method for newly established firms to expand and raise money. Read our post here for additional details on the distinction between an incubator and an accelerator.
Others (Crowdfunding & Government Grants)
There are more methods of generating money, including debt financing, initial public offerings, and crowdsourcing, which are not discussed in this article. Due to the characteristics of diversity, the aforementioned techniques of fundraising are often the most popular ones for Singaporean enterprises.
You might be able to raise equity-free financing with the aid of grants like the Enterprise Development Grant or the Market Readiness Assistance Scheme. You do not need to worry about managing investors' alignment or agreements because they are supported by the government. The sole restriction is that not every company can be eligible for these awards. Feel free to study the articles linked above or contact us for advice on the fundraising process to find out whether you meet the requirements.
Having many investors, such as a network of angel investors or venture capitalists, is advantageous when approaching investors. The rationale is that employing a variety of business specialists gives you access to networks and advice in addition to other benefits. Additionally, they enhance the credibility of your company for upcoming fundraising initiatives. To get the most out of your fundraising effort, attempt to work with investors that are well-aligned with your company strategy or sector.
We're here to provide you with all the information you need. Contact us to find out more.