In a world full of challenges and problems, innovative startup projects appear daily for innovative products and services to fill the gaps in different markets gaps.
The problem of financing the company in its early stages remains one of the biggest challenges facing entrepreneurs, especially when considering traditional paths of targeting financial investors to risk investing in their companies.
The problem lies in the great effort and time required to persuade investors to invest and the difficulties of evaluating the company and the equity that the entrepreneur will give up at the beginning of his company's life.
Therefore, alternative solutions must be searched for the Fund Raising process in the early stages of the company's life.
First: Governmental support programs. Many countries and governments worldwide now realize the importance of supporting the startup eco-system, starting with providing incubators and tax exemption and financial support. For example, there are Kosgeb and Tübitak and the Chamber of Commerce (BTM) programs and many other support programs provided by Various Turkish universities in Turkey.
Therefore, the first step for the entrepreneur to focus on after preparing his idea is to register in all available government support programs to obtain the maximum available support for his company, in addition to what these programs provide in terms of an important and effective network of relationships for the entrepreneur that may benefit him in selling his product/service or reaching the right investors in later investment stages.
Second: Business Acceleration Programs,like our friends in "Hackquarters," have become one of the most important ways to shorten the path to success for startups in their projects' inception as they provide a network of mentors and specialized advisors to support ideas and products as well as provide many opportunities for startups to present their ideas and projects in Various competitions which encourage them to grow and communicate effectively with strategic organizations and investors.
Third: Financing institutions. The idea of financing differs fundamentally from the investment concept in that financing is directly in projects and not the company itself, and financing is aimed at a rapid return on investment, for example. Still, not limited to, there is more than one financial institution type working to finance projects with specific terms such as banks and investment and portfolio management companies and Factoring companies (Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable to a third party at a discount.), there is 57 factoring institution in Turkey.
To clarify more, if your company is working on producing a specific product that serves the technology sector, and therefore one of your most important potential customers is (TechnoSA) or Media Market, etc. All you have to do is prepare a complete form or MVP of your product, present it to potential buyers, and secure an agreement with them.
For example, an agreement to buy 1000 pieces of the product within six months, but the customer will not pay in advance. The challenge here is how to secure the initial cost of production. I can assure you that in this case, it is not difficult at all to convince many Funding institutions to fund the total project, or at least financing a percentage of it, given that upon delivery and payment of the product, you will start getting your profits.
In this case, the agreement is limited to a period and a percentage on the investment.
With a simple math equation, if the cost of producing one piece of your product is $ 100 and the contract between you and the buyer is $ 150 / piece earns 50%, meaning the cost of 1000 pieces is $ 100K and What you need is just 30% of the price, $ 30K for a period not exceeding four months, to produce and deliver the first batch of your product. The agreement requires the financier to obtain 50% of the net profit on the first payment, which means that he will get a 25% return on his investment in 4 months.It is a desirable number for any financial institution and a safe and more secured investment for them.
In this case, you as an entrepreneur have achieved a state of success by producing your product and delivering it on time, and built a reference and credibility in the market without the need for an investor who enters with you at the beginning of the project and gets a large percentage of it that may affect the subsequent stages of investment as well as its direct impact on the management of your company considering Any investor who will be a board member has the right to influence the company's decisions.
Finally, it is essential to understand that funding or investment for your startup project is a factor in driving success and accelerating it and is not in any way a creator of that success.