BY CALLUM Mc DONNELL
Ekaterina Edwardovna Lait is currently a third-year Computer Science student, who in her spare time works on her start-ups and takes on the role as President of the Trinity Entrepreneurial Society.
As the host for this year’s first Open Night, Kate explained all the different forms of financing options available for start-ups. She then introduced four unique case studies amongst the newly formed teams and asked them to use what they learned to decide on what financing each case should apply for and prepare a quick PowerPoint to present.
First things first… Why should you finance?
Financing from a venture capitalist or a loan can be the ideal way to get your business up and running. The influx of cash can help you scale your business and reach more customers. It is advised that you work out how long your company can go without funding, otherwise known as “bootstrapping” and try and fund your business through revenue. This is the best funding as it is debt and equity-free!
Image from akseleran.com
What are the available finance options?
There are many ways you can secure funding for your start-up:
The three F’s
The first place you should look for funding is the three F’s (Friends, Family and Fools). Those close to you want to see you succeed, and can be very supportive. Remember to always be honest with them and make sure they know the risk involved.
A venture capitalist is an investor who will give you money in return for equity or a percentage of your company. They may also want to have a say in the running of your company. So make sure you do your research on the investor and know what they expect from you.
It is the idea of getting a large group of people to invest a small amount in return for some equity. Crowdfunding is particularly useful for B2C (Business to Consumer) companies as it can serve as a good marketing tool for gaining customers.
This is a common funding option for most start-ups. This involves using personal funds to cover business costs. This way, you get to keep control of your business and also all the profits!
Image from geminisolutions.in
The case studies
The case studies varied in the sizes of the companies, from a high-end ladies’ suit shop just starting off, to an established clothing manufacturer looking to expand globally. Each team was given 45 mins to answer three questions about their case:
1. Is the business profitable?
2. What funding, if any, does the business need?
3. What is your plan for a secure funding?
Each team created a PowerPoint to showcase their work and a few were selected to present. The PowerPoints were excellent. The teams really showcased their new knowledge effectively and gave good, convincing arguments on how their business should be funded.
How will you fund your idea?