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Forget about Funding (Posted by Sam Zawadzki)

Tue, 22 October 2013

When coming up with a business idea most people’s first thought is ‘how do I fund this?’
Have you heard of first world problems? If you have, the entrepreneurial equivalent is “How do I get funding?” 
 
When coming up with a business idea most people’s first thought is ‘how do I fund this?’ In my opinion this is the WRONG place to start. The first question should be, “Do people need/want this?!” No matter how brilliant an idea you have, if people don’t want to buy into it, then you will fail. So before stomping down the path of loans/grants/overdrafts and equity investment it is imperative that you test market demand. 
 
I suggest doing this by trying to sell something before you have built it. This is a method employed by some of the most successful entrepreneurs in the world e.g. Bill Gates licensing Ms-Dos to IBM – watch ‘Pirates of Silicon Valley’ for more info. 
 
For any kind of business; waterproof cycle clothing that you can wear to work, a social network for lawyers, or a fake tan self-applicator for your back, you should consider crowd funding it. 
 
This is a really easy and fast way of testing market demand. 
  1. Make a video about your proposed product/service (no business plans needed), 
  2. Set a funding target (how much do you need to make this happen?)  
  3. List your idea on Kickstarter. It’s a site where people donate money in return for a reward, usually a product. If you reach the funding target you get the money and can start building your service. If you don’t reach the funding target then all the money is returned to the donors. Examples of some sweet Kickstarter campaigns can be found here
To help sell your idea you might also want to make a simple website for free with www.wix.com, survey some of your customers with Survey Monkey, or just reach out to people you know using email marketing. All are free tools that you need NO FUNDING to use ;) 
 
Perhaps you already have a business up and running and need to sell some equity in your company to finance growth. Then it’s worth having a look at equity crowd funding. CrowdCube has been in this space for a while and new comer Share In focuses on connecting angel investors to start up businesses. 
 
There are also plenty of niche crowd funding sites: social entrepreneurs should check out CrowdMission, while educational projects can be funded through Hubbub.  
 
Don’t let funding be a barrier to a great new business, if your idea is a good one your customers will help you to get it off the crowd. So start selling and stop wasting your time on funding applications. 
 

About Sam Zawadzki (Director of AdvancetoGO)

Sam Zawadzki is the Director of AdvancetoGO, an online property business that matches tenants and landlords. Sam is an alumnus of the University of Edinburgh and is active in the startup scene in Scotland. Last year he founded the highly successful Startup Summit, a not-for-profit one day conference that attracted over 400 delegates and will be running again this year. He has won several entrepreneurial awards including a Shell LiveWIRE Grand Ideas Award, The Pitch UK and the Virgin Media Pioneers Award where he met Richard Branson.
 

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