Finance is an important factor that determines how far a business will survive and tackling the challenge or preventing it entirely has proven to the problem of the century.
Ironically, there are more business funding opportunities springing up by the day. While many startups hope on business grants and accelerator programs, it's obvious that these are barely enough to get the business off the ground and except your startup is a 50kobo business, your funding options are very limited.
In fact, since our financial institutions don't smile on seed startups, the chances of getting a friendly loan are next to nothing. This leaves out just three more choices:
Family and friends - How many young aspiring Nigerian entrepreneurs actually have rich families and friends ready to support their ideas?
We all know a good number of Nigerian youths going into business are from humble backgrounds and the lack of funds are killing more dreams/ideas daily.
Angel investors & VCs: These wealthy folks are always ready to invest in early-stage startups that interests them. This is great but what are the chances?
I mean, there are not many Angels out there enough to fund even a pinch of the number of businesses in need of financing.
Venture Capitalists, on the other hand, are actually more interested in brands that are already established to a certain level. These guys love to come in after you've been funded by an angel or bootstrapped and had some traction.
Business crowd-investing: This is the act of raising funds for a startup through multiple micro-investments from the public.
Yes, it's basically crowdfunding but crowdfunding is usually as a donation to support a project or cause. Crowd-investing however, means the investors are expecting a return and will be rewarded.
Instead of sourcing for an investor to allocate millions of Naira to you, crowd-investing simply allows virtually anyone to contribute to financing your business by investing smaller amounts which will still sum up to the millions you need.
This concept is quite new to most Nigerians but it may very well be the single financing method that will save a lot of Nigerian businesses in the coming years.
Why should you crowd-invest your startup?
Unlike other conventional business funding methods, crowd-investing comes with more perks other than just funds. For starters, it allows an entrepreneur to actually test the demand for his products in the market while also providing free pre-launch publicity.
1. Fewer Procedures
There has never been any funding method more convenient than crowd-investing. If you want to contradict this statement, try taking N5m unsecured loan from a Nigeria bank as a startup or try getting an investment from a VC as a seed startup with no prototype.
Even startups with high traction will still take months or years of pitching to raise a round of funding. However, startups can literally start raising funds in minutes once listed on our crowd-investing platform.
2. More security
Except you are bootstrapping your startup or you got funded through grants and well-wishers, you are probably already tied to one investor or the other.
This is good in a certain level especially as the investor may have lots of useful contacts and connections that will help you scale assuming you utilize them.
The problem, however, is that you now have a boss who may likely fire you from your company in the near future or at least an additional board member who will be dictating to you on how to run your company.
With crowd-investing (especially on this platform), your investors have no control over you. You don't deal directly with them as the platform handles every transaction that keeps everyone happy.
3. Market Validation
Sometimes some entrepreneurs come up with ideas and rush to pitch to startup incubators without running a market analysis to determine if their products will be welcomed in the market.
The idea may be exceptional, yes but if there's no demand for it, you don't make sales and your business fails. This is why a market survey is very important for every idea even before you build a prototype.
Crowd-investing serves as another market validation as the public will see your brand and show their love or dislike for it. Once you list your startup and micro-investors troop in to fund it, then you've got a goldmine.
If micro-investors don't fancy it, they won't fund you which means, the public probably won't appreciate your product either.
4. Free Publicity
Since a crowd-investing platform is open to the public, there will be a lot of users which amounts to free publicity for your brand. These tons of users will know about your business and be anticipated to see you launch (assuming you are yet to launch).
This drastically reduces your marketing efforts. It creates a lot of awareness that no angel investor or venture capital can compete with without throwing away lots of cash to advertisers.
However, its recommended you keep your business plan and strategy private between you and the crowd-investing platform.
5. Early Customers
After being crowd-invested, you will discover that you already gained your first set of customers or gained a larger customer base assuming you were already operational before the fundraising.
This is because most of your supporters on the platform will be aware of your products and wouldn't hesitate to try them out after spending so much time around your crowd-investing campaign.
In fact, those who funded your business would even be the ones telling anyone who cares to listen about your launch.
6. Investor Support
Unlike other fundraising methods, crowd-investing gives you a platform to continually interact with a community of investors, entrepreneurs and other experts in various fields.
This gives an edge and serves as a support that helps you scale through your challenges and overall growth in your business. You'd be surprised how much help your investors will be willing to offer you just to see you succeed and their investments matured.
Except you were planning to fail, you should know that being accountable is actually a very important quality of a good entrepreneur. Just like loans, crowd-investing keeps you on your toes.
In fact, crowd-investing helps you more than getting financed by a VC because VC expect to lose their money but merely looking at your micro-investors will tell you to sit up and ensure success for the business. You wouldn't want to disappoint that many persons counting to you.
How do you crowd-invest your startup?
For businesses in the west, going to equity crowdfunding platforms like Wefunder or fundable is Ideal. But as a Nigeria startup, then Slourish is your only destination.
To get your startup funded on Slourish, you only have to submit your business details and the Slourish Team will vet and grant you access to creating your own business funding campaign.
Once your business is published, members can start funding it in minutes. Slourish helps you raise funds for your business while still providing you with endless resources to facilitate your project and catapult your success.