Your capacity to get sufficient capital to start and expand your firm, no matter how brilliant your business idea is, is a critical component of startup success. There are ways to fund a Tech startup without much stress.
While many people start their businesses with their own money or with money borrowed from family or friends, there are alternative choices. However, Tech startup owners must be aware that raising startup finance is never simple, and it frequently takes longer than expected.
We will look at 4 ways to finance and fund your tech startup business.
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Like angels, they come in at the right time to help you with funds to build your business. Angel investors are much more likely to invest if they know your sector well, so it often helps to start with your connections in that sector.
Angel investors are individuals with a high net worth (assets over $1 million) who invest their own money in enterprises.
The “angel” term refers to the higher risk that angel investors take by investing in businesses that are still establishing that they have a fair chance of succeeding and require investor help to succeed.
Angel investors typically invest in seed-stage enterprises, providing the extra financial flow that these businesses require to advance to the final stages of technological development and market launch.
They can come at different times of your business’s growth. Here’s typically how it does with Angel investors:
- Angel investors connect with young, developing companies through multivariate means from personal to through a forum.
- If there’s a mutual interest, the angel investor will conduct due diligence on the young company by talking to the founders, reviewing business investment documents, and gauging the industry the company is targeting.
- Once a verbal agreement between an angel is in place, a term sheet or contract is drawn up, with agreements on the investment terms, payouts or equity percentages, investor rights and protections, governance and control parameters and an eventual exit strategy for the angel investor.
- Once the contract is finalized an actual legal agreement is created and signed, the deal is officially closed and the investment funds are released for the company’s use.
Examples of Angel Investors in Ghana include:
- Ghana Angel Investor Network
- Quick Angel Investors
Beyond these in the country, there are many others outside the country you can look at when seeking an angel investor to fund your tech business.
This means in recent times has been a great source of funding for most startups especially in the technology ecosystem. It is basically raising money through multiple funders, often via popular crowdfunding platforms.
Crowdfunding allows entrepreneurs to generate beginning capital for their businesses and can also aid in the promotion of a company’s products or services.
It is not difficult to start a crowdfunding campaign. You create a profile on a crowdfunding website, outlining your firm and its operations, as well as the amount of money you want to raise. People who are interested in what you are trying to do can donate to your campaign.
Typically, they donate in exchange for some kind of reward for their donation (one of your products or services, a discount based on how much donated, or some other perk), or for some form of equity or profit share in your business.
A compelling narrative about your product, service, or organization, as well as a relevant reward for donations, are the keys to successful crowdfunding campaigns. Crowdfunding campaigns have helped some firms raise hundreds, if not millions of dollars.
A crowdfunding campaign can also work to build a community of people interested in your Tech startup or products, and provide a sense of engagement for the donor.
Each crowdfunding site charges some kind of fee to list your campaign, either a processing fee or a percentage of the funds raised. Some of the most popular sites include:
- Crowd Supply
Business accelerators and incubators
Incubator and accelerator programs can help early-stage enterprises get funding. These initiatives, which can be found in almost every large city, help hundreds of new firms every year.
Despite being used interchangeably, there are a few key distinctions between the two names. Incubators are similar to a parent to a child, nurturing the business by providing shelter, resources, training, and a network.
Accelerators are similar to incubators, however, an incubator helps a business walk, whereas an accelerator helps a business run/take a great jump.
These programs typically last 4 to 8 months and demand time commitment on the part of the business owner. Using this platform, you will be able to connect with mentors, investors, and other company founders.
Ghana has a number of accelerators and incubators that are open to helping businesses, especially those with a focus on technology. Here are some of them:
- Orange Corners Ghana
- MEST Incubator
- Ghana Innovation Hub
- Kumasi Hive
- Growth Mosaic
- Hopin Academy
- Ghana Climate Innovation Center
Business Grants are the perfect way to access funds as entrepreneurs and business owners to boost your Tech startup. The Business grants and funding opportunities are offered to individuals, firms/companies, businesses or corporations to enable them to cover scale up or develop their business, pay workers salaries, and run ads.
You can get business grants including to promote your business without paying back, unlike loans that you do have to pay and possibly pay with interest.
There are different types of Business Grants:
Competitive or Discretionary
Most of these grants are offered to entrepreneurs and startups works on selection based on the team of judges/board evaluation or review. Funding is given as a result of the merit of the application i.e the best application is a winner and receives the grant.
This opportunity or grant and funding program basically focus on renewing as a recipient having an offer. It gives the current grants awardee the opportunity of renewing the grants for the next duration period or years.
Non-competitive funding for entrepreneurs are offered to eligible business owners, all applicants who meet the minimum eligibility requirement of the application process are shortlisted to receive the money as an award.
Below are some Business grants available for Ghanaian/African startups and businesses:
- SeedStars World
- Shared Interest
- Tony Elumelu Entrepreneurship Grant
- Lundin Foundation
- Root Capital
- The Anzisha Prize
- Schwab Foundation
- MEST Africa Challenge
- Savannah Fund
- She Leads Africa Accelerator Grants
As a business owner, it is necessary you do your due diligence and make sure your business is compliant enough to qualify for any funding or support.
Depending on the level your Tech startup is, there is a perfect funding solution for it.