Funding the Future: Financing Options For Innovators
There's an endless list of alternatives! 👉👈
Hi 👋 Dear Innovator
Another Saturday. Another day to just kick back andddd relax
(deep breath in. deep breath out)
How are ya?
And most importantly, what have you been working on lately? 🧐
Have you made the world a better place yet?….
EveRyOnE seems to think that this month has been on steroids and we couldn’t agree more, cos we went from the 1st to the 18th of May like snap! 🫣
The good news is that if you haven’t been up and about, innovating and stuff, you still have 13 more days to make a difference before we say hello to June.
So what’s it gonna to be??? 👀
We put together this little piece for you cos we know that sometimes, finances get in the way of some really really great plans… Hopefully, after today, most of those hindrances that are stopping you will become history 😊
Either as an early to mid-stage solution or a well-established organisation, funding will never stop being on the table for discussion and the sooner that solution providers get comfortable with this conversation, the better 🤝
The party favourites when it comes to funding, especially in Africa, usually falls under boostrapping (running your operations on your savings/income), debt-funding (borrowing from banks) or VC-funding (getting money from investors in exchange for part-ownership) and in recent times, Private equity financing
While these options are very good, we dug deeper to come up with others that are also worth exploring 😉:
Revenue-Based Financing (RBF): Like the name says, it is entirely dependent on what an organisation makes as its revenue. This unique solution allows startups and Innovators to receive lump sums from investors (like an advance on their future revenue) and in exchange, the investors get a percentage of the company’s recurring revenue until the lump sum is repaid.
This option is ideal for early-stage solutions 🫡 but if a lot money needs to go into your operations before you start generating revenue, you might want to stay away from it because the repayments are often directly tied to your performance.
Crowdfunding: Putting it simply, crowdfunding means getting money from several investors (they are usually called backers) to give it one organisation.
This democratic approach allows you to reach a wide network of early adopters, brand advocates, and investors. A point to consider is that the process of building a successful crowdfunding campaign takes time, resources, and effort to navigate compliance requirements, market your venture effectively, and reach enough backers.
It’s also ideal for early to mid-stage startups.
Impact Investing: This option is a good fit for organisations that are solving social problems, like digital illiteracy in rural areas or clean energy generation 🎊
The investors that back these type of projects usually identify with the core beliefs and mission of the organisation, but since social impact is a hard metric to calculate, it might be difficult to communicate that detail to interested investors.
The difference between this option and philanthropy is that there is no expectation of financial gain in the latter. Note that 🫡
Security Token Offerings (STOs): This option is more particular to players in the Web 3 space.
As a way of raising capital, companies will receive investments from investors and then offer investors their own digital tokens of the same value. Almost like selling shares in equity funding. With this option, blockchain technology enhances the transparency, but if your company is not yet well-established, it might also be a little difficult for potential investors to trust in the long term value of that token 😢
Pre-IPO Financing: IPO stands for Initial Public Offering. So a Pre-IPO is a way of raising capital from potential investors before selling your shares to the general public. Get it? 🕺💃
Although Pre-IPO and IPOs are more common with traditional organisations or very large tech companies, it’s also a good option to keep in mind for the future.
Entrepreneurship and Accelerator programs are good options too and some members of the Consonance Community Of Innovators like Silfrica, Blueroomcare, Bunce have also recently benefitted from a few of them.
Others include: Corporate venture capital (CVC), Government grants and Innovation challenges.
Dear Innovator, select your top 3 picks from this bunch, research on ‘em and start looking into the funding options that best suit you cos in this quarter, the goal is to be UNSTOPPABLE 💪
A Little Extra Push….
A community of people who are on the same journey as you help to make the process a little more fun ✨ and Our Consonance Community of Innovators thrives on this singular purpose — to serve and to support.
If you’re an early stage founder, if you are building a digital product for or from the African market, if your product is live or if your product has traction, like a good number of customers, our community can provide you that much needed support to keep you on track.
Remember that saying about iron sharpening iron….?
It’s a safe to say that our Community members are iron benders at this stage 😂😂
Seriously though, apply here and if you fit the bill, we will reach out. kk? 😉
Be back on Wednesday, and we’ll explore how to identify false and real information and how that can make all the difference for your tech solution.
Have a good one andddd keep Innovating! ❤️
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