Raising money for your business is always a challenge. Every startup must prepare and plan in detail how they intend to raise funds for their new startup. In countries like Iraq, the lack of access to bank loans makes it more difficult for tech entrepreneurs to raise money for their company. This is made trickier by a lack of angel or venture capital money. So, what can you do to raise startup money without a loan?
1. First, look on the bright side!
First of all, looking for business financing externally should be your last option, not your first. When it comes to venture capital or angel investment, you give up a portion of your company in exchange for money and often, strategic advice and help. But, it usually comes with a lot of conditions attached.
2. Bootstrap your way to tech startup success
Bootstrapping is the process of financing a new company with minimal financial resources. It is the first method to raise startup financing that every tech entrepreneur should look into.
A great bootstrapping strategy typically involves using your own money and asking people close to you to invest. This is coupled with clever use of the money you have to make it go as far as possible towards your business success.
Where possible, use free resources and study how to implement growth hacking principles to accelerate your growth at minimal or zero cost. There are now so many incredible business resources online that are free and weren’t available for the tech startup entrepreneur of ten years ago.
How can you raise bootstrapping money for your startup? Here are the most immediate options:
a. Your own personal money
b. Ask your friends and family
c. Attend essential networking events such as hackathons and bootcamps to meet potential investors and make new contacts
3. Launch a product pre-sale to raise startup money without a loan
The best financing you can obtain for your company comes from your customers. Sure, sometimes external financing helps you grow faster, but at what cost? Building revenue through your customers and reinvesting in your business will see your tech startup grow organically, without worrying about excessive interest rates or losing your equity to an external investor.
An increasingly popular option to raise startup money without a bank loan is to launch a product pre-sale. Companies from tech startups to tech giants have used this fantastic method to generate revenue. When Apple and Samsung announce a pre-order list and charge you, they’re bringing in revenue before their product is launched, for instance.
As a bonus, it creates interest in your product and helps your company to prepare production levels.
Can you launch a product pre-sale to raise funds for your tech startup? Use of social media, networking, leveraging associations like TechHub, and pursuing other forms of online and offline marketing can help you generate interest in your product pre-sale. You can even hold a pre-launch party and promote your product.
This is a very powerful option, but like anything in business that is worth doing, it takes commitment and planning to make it a success.
4. Offer a discount for early payment
Another increasingly popular method to improve business cash flow. This is particularly relevant for business-to-business (B2B) startups. Instead of receiving payment after a month or two, offer your client a small discount if they pay immediately or sooner. As a bonus, you improve client relations too!
5. Apply for government and NGO financing access
Some Iraqi tech entrepreneurs achieve funding through NGO or government financing. These programmes are very competitive though and if you want to stand a better chance of success, you will need to stand out above the rest.
A well-executed, carefully developed application that makes your tech startup shine is absolutely essential!
The Final Word - Raise Startup Money Without A Loan
In the beginning of your tech entrepreneurial journey, it is all about being very clever with the resources that you have.
A mistake that many entrepreneurs make is to look for external funding without first demonstrating some proven success for their business. Investors want to see commitment on your part before considering giving your company money.
Bootstrapping your business, planning and launching a product pre-sale, and offering discounts for early payment are excellent ways to finance your tech startup. If you can win NGO or government funding, so much the better, but it would be dangerous to rely on this as it is ultra competitive. Add growth hacking tactics and careful cost management and your business will be in a strong position!