Starting a new business often requires a hefty outlay of cash, so how can you get funding for your startup? We spoke to Mike Lee, CEO of Fundica, an organization that helps small business owners find funding opportunities.
For a small business owner starting out, it can be difficult to sort through the many available funding options, says Mike Lee. He is the CEO of Fundica, a free online tool that helps startups find grants, tax credits, loans and equity.
“The biggest challenge entrepreneurs have in funding is understanding what is available for them and what is required to get the funding,” says Lee.
Fundica, who partners with Intuit, helps close that information gap by providing an online service which connects entrepreneurs to funders, advisors, governments and other organizations promoting entrepreneurship in Canada.
Lee says that to date, it has helped over 100,000 entrepreneurs since it launched in 2011. In a further effort to improve financial literacy among SBOs, Fundica hosts a roadshow with Intuit in 9 locations across Canada.
“The main goal of the roadshow is to educate, inspire and fund entrepreneurs,” says Lee, who is based in Toronto. The roadshow also features keynote speakers, and gives startups the chance to pitch their ideas and win prizes.
Check out Lee’s four key tips for getting funding:
#1 Conduct Market Research
Although it might be tempting to search for funds right away, Lee says you should do a few things before that. First, you need to make sure your product or service has a large enough market, and people who are willing to buy it. This Canada Business Network guide explains how to conduct a market research project to help you understand how customers would react to your product or service.Next, you should put together a team that is passionate about your idea and willing to work hard to make sure it succeeds. Finally, make sure you have enough cash to survive for at least three months, to ensure you can operate the business while you are trying to secure funding.
#2 Find a Grant
Government funding is a great place to start, as it is “the cheapest and easiest to get”, says Lee. You can search the word “grants” on Fundica to find what the government offers in your industry. Lee advises tailoring your search to be as specific as possible. For example, if you are looking to hire staff, there might be specific grants that provide funds to employ graduate students or immigrants. There are also grants for minority business owners, including women and single parents.
#3 Get a Loan
Many banks offer small business loans, as do governments and non-profit organizations. Before applying for a loan, establish how much money you actually need. If you ask for too much money, you might get rejected, but if it’s too little, it might not be enough to grow your startup, says Lee. Lee warns to always read the small print, and be fully aware of fees and interest charges.
#4 Pitch to Venture Capitalists and Angels
Just as you’ve seen on the television show Shark Tank, there are real-life investors who are keen to have a stake in the next Uber or Airbnb. A list of venture capitalists (VCs) and angel investors can be found in Fundica’s comprehensive database. Lee advises to “do your research” on potential investors, and be ready to pitch and negotiate if you secure a meeting with a VC. “You should put together a killer application pitch because you really only get one shot with funders,” says Lee.As you can see, there are plenty of options to help grow your startup, and tools like Fundica are a good starting point.