Getting financing for a startup is one of the most challenging parts of launching a new business – and that goes double in the hypercompetitive Australian market. While traditional methods like bank loans and venture capital are common avenues, they aren’t always accessible or suitable for every business model.
If you’ve been struggling to secure startup funding, here are six unconventional strategies that could set you on a the right path to achieving your entrepreneurial dreams.
1. Crowdfunding platforms
Crowdfunding might have peaked in popularity a few years ago, but it’s still a great way for budding startups to raise funds – all by leveraging the power of the people. Platforms like Kickstarter, Indiegogo and GoFundMe are ways for entrepreneurs to present their business ideas to an incredibly far-reaching audience, as well as secure small contributions from a large number of people. It can help generate capital while at the same time validating your business concept and building a community of supporters around your brand.
In Australia, there are more specific platforms like Pozible and ReadyFundGo that are giving local startups the chance to connect with investors who are interested in supporting innovative Aussie projects. Just remember that successful crowdfunding campaigns rely on compelling storytelling and ambitious marketing to succeed, so be prepared to invest the time and energy into creating engaging content that really resonates with potential backers.
2. Angel investors and angel networks
You might have already heard about angel investors – individuals who inject capital into startups in exchange for equity or convertible debt. Unlike venture capitalists (VCs), angels tend to invest their own money and are more willing to take risks on early-stage businesses. In addition to funding, they can also be valuable mentors and connect you with industry experts to help your startup grow.
Australia has a fantastic angel investment scene, with networks like Sydney Angels and Melbourne Angels actively seeking out the most innovative startups. If you plan on attracting angel investors, you’ll need a strong business plan and a compelling pitch, as well as the ability to demonstrate the potential for growth and profitability.
3. Government grants and support programs
The Australian government is committed to supporting small businesses, which is why they continue to create grants and programs to support startups. Grants can give you funding at a crucial time without needing to give up any equity or take on debt. Some popular programs right now include the Research and Development (R&D) Tax Incentive for saving at tax time and the Industry Growth Programme.
Take a close look at the specific eligibility criteria and application processes, as you’ll need to do a bit of research and spend time preparing your submissions. If you have the cash flow, you might want to invest in hiring a grant writer or use resources from places like AusIndustry to boost your chances of success.
4. Accelerators and incubators
Alternatively, joining an accelerator or incubator can give your startup funding and access to valuable resources, mentorships and networking opportunities. They provide a structured environment where startups can develop their ideas and refine their business models – all while interacting with a community of like-minded entrepreneurs.
You might like to do some research on places like Startmate and muru-D, which have built reputations for helping Aussie startups scale. They might even have seed-funding opportunities in exchange for equity. You will be expected to participate in intensive, time-bound programs that are designed to fast-track your business’s growth. Overall, being part of an accelerator/incubator can increase your visibility to potential investors and partners.
5. Revenue-based financing
If you’re unfamiliar with revenue-based financing (RBF), it’s an alternative type of funding where investors provide capital in exchange for a percentage of future revenue. It could be attractive if your startup has predictable cash flow and recurring revenue streams, as it won’t require you to give up any equity or take on fixed-debt obligations.
RBF is highly flexible, as repayments are tied to revenue, which means lower payments during slow periods and higher payments when sales are booming. If you want to retain ownership and control while still having access to the capital needed for growth, it could be a great option to finance your business without dilution.
6. Corporate partnerships and strategic alliances
Forming a strategic alliance with an established company could be the avenue your startup needs to get funding, resources and market opportunities. These partnerships can take all sorts of forms, most commonly:
- Joint ventures
- Co-development agreements
- Licensing deals
Many Aussie startups have successfully partnered with large corporations to enter new markets and accelerate their own growth. Startups in the technology sector, for example, might be able to collaborate with established tech giants to integrate their solutions into existing products, and thereby benefit from the partner’s distribution channels and customer base.
If you’re interested in going down the corporate-partnership route, start by identifying companies with complementary strengths and values, then show them exactly how your startup can add value to their operations.
“Securing financing for your startup doesn’t have to be limited to traditional methods,” says David Crook, Managing Director at Nero Financial. “But whether it’s through one of these unconventional strategies or a more practical commercial financing solution, it’s important to surround yourself with experts who understand your business and are committed to your future success. Our team of commercial brokers are standing by to help you get the funding you need for your startup.”
Funding your startup and achieving your entrepreneurial ambitions is possible. The expert brokers at Nero Financial will help you understand all the funding options available to you – both traditional and unconventional. Reach out to Nero Financial today or call us on 1300 025 949.
“The opinions expressed by BizWitty Contributors are their own, not those of BizCover and should not be relied upon in place of appropriate professional advice. Please read our full disclaimer."
