Would you have decided to go for a startup, here are some tips to fund it.
In addition to the well known traditional sources of funding:
- The 3 F’s (Family, Friends and… Fools)
- Business angels
- Venture capital firms
there are other less known options that can be considered.
A recent approach is crowd funding. This is achieved by finding a large number of investors prepared to invest in your project. Since the internet is the most obvious way to recruit those investors, several websites are now providing platforms that connects investors and people seeking money (i.e. www.c-crowd.ch, www.wiseed.fr, www.sellaband.com). One of the benefits of this formula is that it is not restricted to startups. It is available for any project, including charity and not-for-profit projects. Since the investment can be very small (even € 100), another advantage is that it gives small investors the opportunity to be involved in a project that they like.
Another even less known approach is the private placement. The idea is to find a group of medium size investors who invest as a group in a project. This is like a club of investors governed by a private placement agreement that sets the way it operates. Different legal structures can be considered and legal advice is of course indispensible. I have for instance seen a private placement successfully used to finance the purchase and operation of a submarine taking tourists for a one hour exploration cruise.
Raphael H Cohen