The First Fifty Percent
One of the things that has been repeated to me several times in the past couple of months is that the ’second’ fifty percent of funding any endeavour is the easiest bit to get.
Organisations such as InvestNI, NIScreen and programmes such as InterTradeIreland’s INNOVA or the new Creative Industries Innovation Fund all provide pieces to the puzzle of funding innovation and development of new products and business models. For the most part, however, match funding is required, i.e. if your budget is £100 000 to do some development, you have to find £50 000 if you expect the other £50 000 to come from public funding. This isn’t unreasonable by any means because it shows you have given commitment, that you have honestly tried to fund this project yourself. At the end of the day, the use of public money for a project must be justified.
Assuming these funds represent the second 50% of a project, where can you find the first 50%?
Cash and Savings - what you have in your personal wealth is the first contribution towards funding your venture. If you can’t put your own money into the venture, how do you expect to convince others to put money in.
Bank loans and Credit cards - these are other options for funding though being smart about it and going for a loan rather than dumping the company startup expenses on a credit card would be the smartest thing based on rising interest rates. Some banks may also still offer the Small Firms Loan Guarantee where the government guarantees 80% of the loan you take. In my experience, banks are loathe to consider it and want double indemnity but the current credit crunch may see some progressive bank willing to take a risk on technology now that property has failed them.
Work In Kind - depending on the funding body, they may accept your work, past and future, as a vital contribution to the project. A month of working on a project represents might represent almost 200 hours at an agreed daily rate. At £100/day, it would mean your contribution to the project was around £3000. Increase the number of months and you quickly work up a decent contribution in kind.
Business Angels - An Angel Investor is usually a serial entrepreneur who has had some success in business previously and has some money (and the will) to invest in some new business ideas. Much of their value therefore comes out of their experience, their contacts and their focus on making it a success. In Northern Ireland, there is a business angel network called ‘halo‘ but you may also find a business angel at a local networking event like the upcoming Digital Circle launch.
Venture Capital - A venture capitalist is similar enough to an angel for consideration. Usually a VC represents not only their own money but the money of several partners. They tend to be more focussed on a much more limited number of businesses than Angels and they may desire more ownership in a startup as a result of that focus and investment commitment.
Winnings - while we may all dream of winning the lottery, there are several competitions out there which can provide some early stage funding. At the time of writing, InterTradeIreland’s Seedcorn and Ulster Bank’s Business Achievers Awards have just closed for judging. Open for entries is the InvestNI and UlsterBank “Innovation and Export Awards 2009“:
The winner of the Business Excellence award will receive a support package worth up to £35,000, with winners of the Exporter of the Year and Innovator of the Year awards each receiving a support package worth up to £25,000.
Winners of the Best New Innovation and Best Emerging Exporter awards will each receive a support package worth up to £10,000 to help take their business to the next level.
If your idea really is that good or your product or service is starting to take off, then an entry into this and other competitions would be good sense.
Tags: funding, halo, investi, investment
November 5th, 2008 at 10:45 am
[...] a lot of content about the Digital Circle this morning, mostly in the area of upcoming events , sources of funding and I’d like to invite people who read my blog, who are also involved in the Digital Content [...]