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Are you a creative and entrepreneurial person with a great idea? Then you may be the perfect person to develop a startup business. Deciding you want to start your own business can be a fantastic and rewarding venture but has several challenges along the way. Primarily, new businesses are expensive. Most people cannot afford to fund their business solely using their own resources, so looking for other funding sources is a crucial step when starting a business. However, it can be extremely challenging to finance your new startup. This article will outline some methods of startup funding in New Zealand. 

What is a Startup?

A startup is usually a business centred around a new idea or product that an entrepreneur has developed. Furthermore, startups are most often centred around technology products but can be any new idea or product. 

Many challenges can result from creating a startup. Therefore, ensuring that this idea or product has the makings of a successful business is vital because if the product fails, so will the business. It should be a product that:

  • stands out from the competition; and
  • can support a business independently.

Fortunately, because a startup is a new product, your business will not be entering a pre-existing market, meaning there will be less competition. 

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How Do I Get Funding for My Startup?

There are many ways you can finance your new startup venture in its early stages. Therefore, you should make sure you choose the one that works best for you and your business.

Private Investors

Private investors are business-minded people with extra spending money who may want to invest in New Zealand businesses. Often, these individuals are professional investors. They may also be known as angel investors or venture capitalists. Angel investors will likely want to invest in businesses they believe will be profitable to increase their own wealth. There are several organisations that can connect people with investors who are interested in funding businesses in New Zealand.

Having a great idea will make you more attractive to venture capitalists. However, being able to communicate your business idea is just as important. Therefore, make sure that you come up with a clear and impressive sales pitch.

It is a good idea to get finance for your business from investors. However, if you receive funding from investors, they will have a stake in your business, and you will be responsible to them for the decisions you make. Therefore, make sure you consider whether this is something you want before you accept money from investors.

Regional Business Partner Network (RBPN)

The RBPN is a government-recommended organisation that provides support for new businesses. They are known as the first port of call and can provide a wide range of assistance to help you get funding. Therefore, you should contact your local office of the Regional Business Partner Network to see what assistance they may provide.

Tech Startup

If you are a technology startup company, you may be able to get funding from Callaghan Innovation. This scheme provides funding for new technology companies. They also provide funding for undergraduate and postgraduate students pursuing startup ventures. You should contact your Regional Business Partner Network for details on the scheme. 

Māori Entrepreneur

If the majority ownership of your business is Māori, several organisations assist Māori entrepreneurs. The Māori Business Growth Support organisation and Māori Innovation Fund are two such organisations. The organisations will pair you with an account manager who will assist with your areas of need. It is a good idea to get a clear business plan in order before you contact these organisations.

Government Benefits

If you are on a government benefit and wish to start a business, many different funds can help you. 

Flexi-Wage for Self Employment

The flexible nature of the scheme means that you can seek the minimum wage for up to 30 hours a week for up to 52 weeks. 

Self-Employment Startup Payment

This is a grant of up to $10,000 per year, which can be used to pay for different types of expenditures like equipment, leases, insurance and advertising. However, this grant is not available if you are currently bankrupt. 

Business Training and Advice Grant (provided by Work and Income)

This grant provides you with support in developing your business plan and training in commercial skills. Usually, you apply for this in conjunction with the Flexi-Wage scheme. 

Key Takeaways

If you have a unique, creative idea you want to make into a business venture, you may be the perfect person to create a startup. However, starting a new business is an expensive venture. Working out where to get financing for your new business can be challenging, and you must consider which avenue is right for you. Contacting your Regional Business Partner Network is a great way to understand what is available to you. Private investors may be a great answer if you are happy to give up some control of your business. If you are receiving a benefit, are creating a tech startup, or are a Māori entrepreneur, more forms of financing will be available for you. If you want assistance with your startup venture, make sure to get in touch with LegalVision’s New Zealand startup lawyers. Call 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Can I get funding for a startup if I am receiving a government benefit?

Yes, there are several allowances provided by the government to help people receiving benefits with their startups. However, you cannot apply for these if you are bankrupt.

How do I make my startup attractive to businesses?

Having a great, straightforward way of explaining your startup idea to potential investors is a fantastic way of marketing your business and attracting new investors. 

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