Four ways to fund your startup - recapping an event with Startup Victoria
What’s better than one way to fund your startup?
Four ways to fund your startup. Or even more, as you’ll see below in this snapshot of an event we held in partnership with Startup Victoria recently.
We’re passionate about helping founders and business owners understand their funding options, which is why we made a free funding guide.
It’s also why we run funding events like this one, which brought together a panel of experts in different types of funding and a founder, to share her own funding journey so far.
And it is a journey. As a startup, you’ll likely need several funding sources at different times. One of our top tips upfront is that each funding source takes about six months to secure. So it’s important to know your cash runway and your funding options, and give yourself enough time to access them.
1. R&D Tax Incentive
The R&D Tax Incentive is one of the main sources of startup funding in Australia. Ben Kluwgant from Catalyst Solutions (pictured above) explained how this tax offset works, providing annual refunds of up to 43.5% of development costs as long as you meet the eligibility requirements.
It’s not just for tech startups – manufacturers, engineers and medical companies are also big users of it, among others.
Ben also covered other government incentives for innovation that startups can take advantage of, all of which provide funding options that don’t require founders to give away equity in their startup.
2. R&D financing
If you’re eligible for the R&D tax incentive, you should know about R&D financing too (also known as ‘forward funding’).
Brendan Bennett from Fundsquire (pictured above) talked about this source of funding, explaining how R&D financing services will consider loaning your company your expected R&D tax incentive in advance. You pay it back when you receive the cash back through the tax process.
This is another option for founders not wanting or ready to give up equity in their business, and just like the R&D tax incentive, it’s an annual option (subject to eligibility).
3. Equity investment
After covering two options where you don’t need to give up equity in your startup, Ariane Barker from Scale Investors (above) shared her extensive knowledge about the world of equity investing.
She explained how venture capital and angel funding works, and how giving away equity – even in exchange for funding – isn’t always appealing to founders. However, it can be extremely useful because these sorts of investors are usually really well connected and experienced, which can go a long way in building your business into something worth a lot more for you (and your investors).
4. Other ways to fund your startup (from a founder’s perspective)
Finally, we heard a founder’s perspective on funding from Shannon Gilleland of Pronto Bottle (above).
Shannon shared her funding story taking in boostrapping, family and friends, pitch competitions, accelerators and crowdfunding.
Her top tip? Plan. If you spend months working on getting one type of funding, like pitching to venture capitalists, and then it doesn’t work out, what are you left with? You need to know what your plan B, C, D … etc. are so you don’t run out of cash.
Meet more founders like Shannon
In business and life, connections really count. Startup Victoria has a Founder Connect event series – structured breakfast networking sessions designed to help you connect with other founders to share your knowledge and experiences. Keep an eye out on SV’s events page to register.
While you’re at it, follow us on Eventbrite to hear about our regular funding, startup metrics and accounting events.
And don’t forget, to really understand the full range of startup funding options get our funding guide here. It could be the best 15 minutes you spend this week.
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