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Securing necessary funding is a challenging but critical step for New Zealand startups. As a new business, having access to funding is necessary for expanding your operations and investing in research and development. This article will give you eight tips to help secure growth capital for your New Zealand startup.
1. Consider Your Funding Needs
You must have a clear understanding of your funding needs. This requires you to:
- assess your business goals;
- consider your expansion plans; and
- review your operational requirements.
A comprehensive assessment will allow you to determine how much capital you need and lay the groundwork for your funding strategy.
2. Create a Solid Plan
Startup investors and traditional lenders will require in-depth information about your startup’s financial viability before they commit to providing funding. As such, a detailed business plan is absolutely necessary. This document will act as a roadmap for potential investors and should focus on the financial aspect of your business, including:
- financial projections;
- market analysis; and
- details of the competitive landscape.
It is also essential that your business plan outlines a clear strategy for what you would do with any growth you obtain.
Continue reading this article below the form3. Look For Government Grants and Incentives
The New Zealand government offers a variety of grants and incentives specifically designed to support startups and other small businesses. Such grants can boost your funding without diluting your share in the business.
You should take advantage of these grants by researching and identifying any programs that might align with your startup. You should also check whether your startup meets the requirements before applying.
In addition to the capital you receive, working alongside government entities demonstrates your commitment to contributing to the local economy.
4. Participate in the Startup Ecosystem
Building a network within New Zealand’s local startup network can help open up doors to potential investment. To facilitate this, you should attend industry events and join startup accelerators. Networking can provide you with valuable insights and advice on how to operate your startup. It may also put you in touch with mentors who can lend additional guidance.
Further, networking has the added benefit of potentially leading to introductions with potential investors. As such, establishing your presence in the startup community will enhance your credibility and increase your chances of attracting growth capital.
5. Maximise Your Financial Management
Investors and lenders will carefully assess a startup’s financial position before committing to providing any form of investment. To address this, you must implement solid financial management practices. This will help demonstrate financial responsibility and transparency. To maintain effective financial management, you should:
- keep detailed and accurate financial records;
- monitor key performance indicators (KPIs); and
- showcase a solid understanding of your financial position.
6. Explore Non-Traditional Funding Sources
If you are struggling to secure growth capital the traditional way, you should consider non-traditional sources of funding. This may include:
- partnerships;
- joint ventures; or
- licensing agreements.
The above methods facilitate collaboration with established companies in the same industry. Not only can they provide you with financial support, but they also can give you access to valuable resources and established customer bases.
7. Flaunt Your Milestones
Investors are more inclined to provide capital to startups that have achieved significant milestones. As such, you should always provide evidence of any success you have had, such as:
- customer acquisition;
- revenue growth; or
- successful product launches.
This can build confidence among potential investors and show that your business is headed for future success.
8. Prepare for Due Diligence
You must be prepared for due diligence once you have attracted prospective investors or lenders. As touched on above, investors will examine your business in detail, including its:
- operations;
- financial health; and
- legal standing.
Therefore, you should anticipate this assessment and address any potential concerns. This streamlines the due diligence process and shows you are committed to complying with all relevant guidelines or regulations. Accordingly, a well-prepared response will both speed up the process and instil confidence in your new investors.
Essential reading for anyone building their startup. This free guide includes practical advice and seven real-life case studies.
Key Takeaways
Having access to growth capital is essential for startup growth. Whether you are in the early stages or hoping to expand operations, you, as a business owner, should aim to secure the necessary financial support. However, this can be a challenging process for many businesses. As such, you should note some key tips to improve your chances of being successfully funded, including:
- considering your funding needs;
- creating a solid plan;
- looking for government grants and incentives;
- participating in the startup ecosystem;
- maximising your financial management;
- exploring non-traditional funding sources;
- flaunting your milestones; and
- preparing for due diligence.
If you need assistance understanding how to secure funding for your New Zealand startup, you can contact our experienced startup lawyers to assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at 0800 005 570 or visit our membership page.
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