|
Getting your Trinity Audio player ready...
|
Summary
Beyond getting loans from family and friends, other ways to get funding for your business includes grant application, seeking crowdfunding and entering for business competitions.
A common source of funds for entrepreneurs, especially in the informal sector, is loans from family and friends. According to Moniepoint statistics, “When businesses in the informal economy get access to loans, their primary sources are from friends and family (70.7 per cent). Other sources are from loan platforms (15.1 per cent) and traditional banks (12.2 per cent).”
There is a great need for access to credit, especially among innovative entrepreneurs. Although knowledge of accessing alternative funding is limited, it is vital for business establishment, growth, and management.
Here are seven ways entrepreneurs can get funding for their businesses:
1. Look for Angel Investors
Angel investors are individuals who provide funding to new businesses in exchange for a stake in the company. Angel investors are becoming more popular in Nigeria, especially in Lagos, Abuja, and other business hubs. Apart from funding, they can offer mentorship and open doors to other connections in your industry. To attract potential investors, prepare a solid business plan and pitch.
2. Apply for Government Grants and Programmes
The Nigerian government offers several funding opportunities for small businesses, especially those run by youth and women. Programs like the Youth Entrepreneurship Support Programme (YES-P) Program, YouWin, and Tony Elumelu Foundation Grant provide entrepreneurs with funding, training, and mentorship.
3. Consider Microfinance Banks
Microfinance banks provide loans to small businesses that may not qualify for traditional bank loans. Nigeria has several microfinance institutions specifically focused on supporting small businesses. Although traditional banks are stricter, some, like Access Bank and the Bank of Industry (BOI), have specific loans for SMEs and startups.
4. Try Crowdfunding
Crowdfunding platforms allow you to raise money from many people who believe in your business idea. While global platforms like Kickstarter and GoFundMe are options, Nigerian-focused platforms like NaijaFund and FundanEnterprise are also gaining popularity.
5. Join Business Incubators and Accelerators
Incubators and accelerators support startups with funding, mentorship, and networking. For example, the Lagos Innovates program, CcHub, and FATE Foundation are incubators and accelerators in Nigeria that help young businesses grow. These programs often end with a pitch day where you can meet potential investors.
6. Participate in Business Competitions
Many organisations host competitions where you can pitch your business to win cash prizes or support. Some popular competitions in Nigeria include Lagos StartUp DealDay, Diamond Bank’s BET (Building Entrepreneurs Today) Program, and Sterling Bank’s iCreate Africa Skills Festival. These events can also introduce you to investors and mentors.
7. Venture Capital Financing
Venture capital (VC) firms provide funding to startups with significant growth potential, especially in technology, healthcare, and other high-growth sectors. In exchange, VCs take equity and often have a say in business decisions. VC funding is ideal for businesses that require substantial funding and have a clear path to scalability and profitability. Start by networking with venture capitalists and participating in pitch competitions.
Editor’s Note: This story was first published by Crispng.
