Thread by @tonyOWEI

How To Raise Money For Your Business - THREAD!

Raising money as an entrepreneur could be tough especially if you lack knowledge about it. I will be sharing from my own fund raising experiences in the course of the thread – real life lessons.

Now let's move.

However, it is not enough to raise money, but you must know where to put the money to ensure you do not go broke shortly afterwards and have your business close down.

94% of new businesses fail during first year of operation. I started my first ever business venture @TonyveFarms by winning a grant of 8 million Naira in 2014. Very few people ever get this rare opportunity.

I have gone on to win another grant, put in savings, funds from family and ultimately raise an expansion loan from the Bank of Industry at a single digit interest rate.

However, the best way to raise money is from your customers, otherwise known as bootstrapping. I will talk about this too.

Let’s be frank. Money is always an issue when it comes to business and other areas of life. We need money to fulfill dreams, take vacations, comfort and help others. Money in itself might not be the thing but you will agree with me that spending money create good memories. 😜😜

Before I continue, let me make something clear. NEVER take a loan to start a business. You are not Dangote. It is safer to get one when you have figured out the market, you are already making sales and what you desire is to scale or expand the business.

MISCONCEPTIONS ABOUT RAISING MONEY

There are misconceptions about capital. Some say capital is scarce. Others will say it is too difficult to raise and some want to raise huge capital immediately. You have not managed 500k & you want someone to fund you with their 5-10 million?

Please note that capital is raised in series and phases. There is alot of capital looking for the right entrepreneurs. The challenge however is many entrepreneurs have not learnt to be the right entrepreneurs to get it.

Businesses are categorized broadly into idea/pre startup stage, start up, growth and mature businesses. Nobody invests in ideas. They fund businesses. Your idea can only be validated through the market you intend to serve. So make a move on that idea of yours today.

Now, when you will require funding depends largely on the nature and type of your business. So for an entrepreneur, how do you raise funding? I will start from the elementary ones and take it hotter as we progress.

The hot gist begins.

1. Savings: This is the first thing to consider.

Develop a healthy financial habit and save no matter what you earn. Focus must be on increasing your income anyway as savings does not increase income or make you rich. Investment does.

Change your lifestyle, track what you earn and what you spend, cut off unnecessary ones.

Force yourself to save. I started building an emergency fund on @PiggyBankNG. It comes with little interest unlike our banks who charge us for maintaining the ATM cards in our pockets. 😁😁

2. Angel Investors:

They are rich folks who love risk & invest in ideas/early stage businesses. They could take shareholding too. They are not much around here but there are few ones if you look around & build the necessary network. I am an aspiring one. Look out for me 😁

3. Family and Friends:

They are another good source for money. However, you can offer them equity to have them release it & commit them to the venture. The terms must be spelt out legally. If you have those who do not believe in you, move along quickly. No time for sulking.

4. Venture Capital:

They are the big man/woman version of angel investors. They come in big when they see a company doing well and needs growth capital.

I once wrote to several of them before raising our expansion funding from @BOINigeria.

Some replied that I should have made sales of 1 billion Naira. I must be looking to raise minimum of 1 million USD and one even said they invest from 20 million USD and above.

They invest in forms of loans, equity or both.

If equity, they have an exit strategy in place and know when to exit and cash out big time. They are hawks looking at how to turn their big money into even bigger money.

As an entrepreneur, be smart when dealing with them.

5. Grants, Competitions and Specialized programmes:

There are several of these coming up every now and again. They give grants (free money) to fund ideas or small businesses. Some are general while some target specific sectors.

The grant I raised to start @TonyveFarms was from YouWin. We also got NDDC grant. I have helped few persons win the Tony Elumelu Entrepreneurship Programme, Innovate Agric Challenge for AgriTech businesses is currently open – 5000 USD see link to apply: (mtfc.crenov8.com/innov8-agric/)

Others are @ZSP_EN, @AEAward (I made top 30 across Africa and the team from Morocco visited us in Nigeria 2018. I was a stone throw to winning up to 100k USD grant but I didn't eventually 😭, YAIF grants for @YALIRLCWA alumni

@Unilever Young Entrepreneurs Awards youngentrepreneursawards.unilever.com/signup

@MIT Solve: solve.mit.edu

And many others.

Grant writing however is a skill set that people charge for nowadays. It is either you learn how to write them by refining your skills and write for your business or talk to those who can do it for you for a fee.

7. Incubators and Accelerators:

They are not too common in Nigeria but there are few around springing up in different cities. I worked for one in Nairobi @GrowthAfrica over 7 years ago where I cut my teeth in entrepreneurship.

They basically have you go through their programme, give you mentorship, co-working space sometimes, where you meet like minds, help you refine your idea or business and raise funding.

There is one currently available in Nigeria that I know of – Ventures Platform (venturesplatform.com), they invest up to 40,000 USD (majorly tech businesses) and have invested in @PiggyBankNG, @paystack and an agritech company that I know of. Check them out.

Also check out The Outlier Venture Lab
gust.com/programs/the-o…

And

@FledgeLLC :
fledge.co/about/startups/

Have a competent lawyer look at agreements, documents and all before signing. Develop your negotiating skills too.

When I say tech, your mind shouldn't be thinking of coding, software development and social networking sites. Look for a business thriving offline and think of how to enhance it using technology. A tech business is born.

@JumiaNigeria and @ShopKonga gave us supermarket online.

@PiggyBankNG gave us 'akawo' or ajo online.

My newest business @ePoultryNG will make you own a poultry farm of yours from your mobile phone at insanely cheap prices with mouth watering returns. Highest in Nigeria so far 😜.

A little digression. Now back to fund raising.

8. Social Capital:

The people you know now are useful to raise funding – it might not necessarily be cash.

There is a woman who approached me to retail our eggs. I give her some crates weekly, she sells & then comes back to pay, keeps the profit & get more supplies.

She is already in business with zero capital. Someone can put in mouth for you, give you referrals for your services, give you goods to sell and return after selling.

In all, this can work if you have built a good reputation and have integrity.

INTEGRITY IS IMPORTANT AS AN ENTREPRENEUR. YOU MUST CULTIVATE IT STARTING NOW!!!

HOW TO RAISE MONEY FOR YOUR BUSINESS.

PART TWO STARTS HERE BY 8PM!

9. Bootstrapping:

Basically self-funding. Raising money from customers.

I know few people who have built their businesses literarily from zero.

A mentee of mine started with a borrowed laptop and table sitting in front of a barber shop, now he has over a million naira savings in his account in just 2 years.

@NairaBET was put at 50m USD in a 2015 article. I am sure it is way more than double that at present. Oloye @akinalabi raised no grant nor took a loan when he started in 2009.

My mentor and friend @ronaldnzimora built his businesses from ZERO too with no loan or grant.

For this however, it is not overnight (patience in every pursuit is compulsory – no farmer plants a seed today and harvest tomorrow) and you have to sell what people are really hungry to drop their money for.

I am building my newest AgriTech business @ePoultryNG bootstrapping. I want to practicalize that it works. I will share the incredible results along the way.

10. Partnerships:

Partner with others who have skills you need or money to start and expand your business.

However, wisdom is profitable to direct. Do not disclose the entirety of your idea and later become a victim of idea theft.

If you can, patent, trademark and have lawyers to do legal agreements that are enforceable in the court of law. Ignorance is no defense. Do not partner with unserious people who want to cash out immediately. Reason why you need legal backings.

You will be a joke of an entrepreneur if you do not have legal and tax plugs. Ignorance I repeat is no defense.

11. Cooperative organizations:

They basically work to provide self-help and mutual help to its members. They are a good source of funding. I love this thread by @yinkanubi on cooperatives.

https://twitter.com/yinkanubi/status/1130379241902759937?s=19

12. Crowd funding:

Like the name implies – it means raising money from a crowd or lots of people. It is like taking a loan from several people to fund your business.

Assuming you need to raise 1 million and you offer a return on investment. You can have 20 people put forward 50,000 each with and offer of return on investment.

If I want to put in 2 million naira into raising broilers in our farm for instance, I can offer 40 people 20% returns in 6 months for 50k each.

Now that is if you have your business figured out. @ePoultryNG uses this model.

13. Information Products:

Many people do not know they can monetize their skills and knowledge. My friend and brother @ronaldnzimora calls it “sell your brain". He actually authored a book with that title.

If you have a skill or knowledge, package it into an e-book, audio file or video and have it sold. Could be an online course, webinars, etc. With an excellent sales copy, this can work like magic.

Imagine having a knowledge on how to obtain a second passport, or give birth abroad uniquely where you can have your kids get an American passport cheaply without being born in the USA (that is being born in an American territory), or how to sell more...

...how to rear fishes profitably or how to have a stress free pregnancy that your grandmother told you, and what have you.

The world is waiting to consume your knowledge and make you rich in return.

Importantly, do not feel bad charging for YOUR knowledge.

VALUE brings money!

14. Loans:

The big elephant in the room

Do not take loans from our conventional commercial banks because the interest rate is too high. Infact, they won’t even give you.

Get loans from specialized banks like Bank of Industry @BOINigeria, Bank of Agriculture, among others.

Microfinance banks too are there but their interest is also high. Imagine getting a loan for 1.5 or 2% per month, that’s like 18 – 24% per year too.

I will talk about @BOINigeria loans since my business got from them. It took us about 18 months after applying, submitting documentation, getting an offer letter, meeting pre-disbursement requirements and then having the funds disbursed. Yours should be faster.

You don't have to know any one nor grease any palm please. It applies to very small, small and medium scale businesses too.

They pay a little fraction to you as cash (maybe 20, 30, 40% or more depending on your kind of business) and others directly to your vendors whom you...

get to choose yourself and submit an invoice in the course of application. These vendors are to supply you equipment needed for your business. We got from them at 9% annually with a 5-year tenure!

BTW, I am thinking of looking through the process and create an information product about it. Many will buy as they are looking to raise funding especially loans at 9 to 10% in this economy. 😁😁🤸‍♀🕺🏻

Refer to number 13 in this thread.

On a final note

Remember not to take a loan to start. Try as much as you can to increase your knowledge on fund raising as well and position yourself to be the right entrepreneur.

Fund raising is NOT sales.

Sales is NOT profit.

Make money enough from selling and have it cover your expenses and remain.

Develop your money skills to ensure you can grow the money you make. Seek advice along the way.

Many are scheming to take away your money (tax, government, FIRS, your employees sometimes want to steal from you, Power, etc).

You too, find a way to ensure what they take from you reduces but ultimately make more money. Save. Reinvest.

THE END!

Thank you for your time.

Takes a bow as I expect questions, comments and queries.

🙏