How to win start-up capital from donors – Business Daily
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Start-ups require capital to meet their operational and growth expense. There are very many grants in the market for f start-ups. A grant is usually offered by a donor with or without conditions.
However, most grants do not require start-ups to repay the donor. A grant can be looked at as a financial incentive or gift to enable a start-up to raise capital.
There are very many institutions that offer grants for qualifying start-ups. In most cases, donors fund start-ups aligned to their cause.
Of late, I have seen increased grant opportunities for various causes like climate change, agribusiness, women-owned enterprise, environment-related causes and other social welfare causes. I have also seen a lot of grant funding opportunities in Kenya.
There are many types of grant funding available. One type is competitive funding.
Under competitive funding, the donor issues the grants to the winners in a contest. You may have seen announcements for such competitions. Often the winner is picked after a rigorous selection and vetting process and funded by the donor.
Formula funding is a grant, which is given to a specific target group. The donors may choose to fund start-ups in certain sectors or geographical locations. They may also choose to fund start-ups of a certain size and turnover.
The key to accessing donor funding is mainly how you position your start-up. Competition for donor funds is very high and there are likely to be a good number of start-ups eyeing the same funds.
For your start-up to access donor funds then you must stand out in the crowd. I believe it all starts at the concept stage. Unique and innovative concepts and businesses founded on such will stand a higher chance.
I have noticed that values-driven start-ups also have a higher chance of accessing donor funds. Donors love to fund businesses that stand for social welfare. Therefore, have some sort of social welfare causes to attract funders.
Even though donors do not require anything in return for their investment, they may want the accountability of the funds from the recipient.
Therefore, it is proper to have good governance and accountability practices. For example, what are your financial accountability structures? Donors may be discouraged if a start-up does not have any structures in place.
Most grants are accessed through proposal writing. Some experts help start-ups in proposal writing and in seeking out funding opportunities. It would be worthwhile retaining such an expert to help your business stand out.
Some tips I can give you are to first of all check for eligibility before sending out proposals. I recommend the alignment of your business for future grant opportunities. If there are increased opportunities in climate change then how can you align your business to the donors?
Do a background check on the donor to ensure compliance with money laundering. This will spare you the heartache of being a recipient of “wash-wash funds and get rich schemes”.
While most grants do not have conditions, some grants are conditional and will require you to sign some documentation before receiving the funds. Check with your lawyer before you get into any contracts with donors because these contracts are legally binding.
The writer is the founder of C Mputhia Advocates
