Startup Funding Guide

Every entrepreneur wants the very best shot at fimding for their business, whether that’s angel, seed, venture capital, institutional or private funding. This means becoming highly investable as an entrepreneur and being deal ready. Most new entrepreneurs struggle to navigate this process and often do not have the knowledge, experience and resources to create a successful first time outcome. There are many ways to fund your start-up, here are some of the most common.

A comprehensive research conducted by experts has shown that business startups within the first year often capitulate due to a myriad of reasons. The salient requirement for any business to prosper is nothing short of capital. This is because capital is the basic ingredient for any business to thrive. Without adequate finance, business startups tend to crumble, and this malignant obstacle often causes infant business startup owners to seek financial backing for their startups.

Self-funding (Bootstrapping)

This is often the most common way for a start-up to fund a venture, usually consisting of small amounts of saved cash or credit card facilities. Mortgaging an asset such as a home is also common if the entrepreneur is at a later stage of their life. Self-funding range from as little as a $100 to over $1,000,000. Serial entrepreneurs with proven success and positive cash flow in their existing businesses often see self-funding as the optimal choice. learn more or scroll down ↓

Friends and family

While it may be considered taboo to do business with friends and family, Mark Zuckerberg had his dad as an early stage investor and the rest is history! Most entrepreneurs will keep a “love list” – those they know that they may call on when they have no other options.

Obtaining funding from family and friends is a unique way to kick off your startup. Friends and family are usually flexible when it comes to servicing your loan debt much more than other external sources.


- Funds can easily be accessed

- Little or no bureaucratic obstacles

- Flexible interest rates


- Bootstrapping doesn't work for large businesses; it only works for small-scale enterprises 

- Potential for relationships to be marred.

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Bank loans

Banking institutions provide financial backing on loans to individuals who approach them with a solid business plan, and not mere talk (in fact, almost funding sources may require a business plan). In Banks, banks such as ADB and GCB have low interest rates, and no/low security loans for entrepreneurs of value up to $50,000. These loans are usually interest only first year and have little or no security over them. This demonstrates that the big four banks in Ghana are seeing the early stage investment into entrepreneurs and start-ups as future large customers.

The business plan must be well structured to convey the modus operandi, profit forecast and estimated time of maturity.

The financial provision of banks is in two forms, they are working capital loan and funding.

Working Capital Loan

This loan is designed to traverse one full cycle of revenue generation. Stocks and debtors usually have leverage on the limit.


This process involves providing the business plan and concise information of the valuation, alongside the project report on which the loan was sanctioned.


- Large capital can be accessed by entrepreneurs

- Capital provided can fast-track the process of income generation


- High risk of Collateral loss, since it is an important requirement for loan grants
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Microfinance Providers or NBFIs

Microfinance was set up to give access to capital to small-scale entrepreneurs that lack access to conventional banking capital or loans. Individuals with poor credit ratings see microfinance institutions as a respite whenever they are out of favor by conventional banks.

Non-Banking Financial Institutions (NBFIs) give out loans to individuals who seek loans, without necessarily imposing any legality like conventional banks and credit repair services do.

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Seed and Angel investors

Both of these groups are made up of private investors. Angel investors are basically people with a huge amount of capital and are willing to invest it on over the edge business ideas. Angel investors sometimes come together in groups to scrutinize business proposals, in order to select the perfect candidate to invest in. Put simply: a group of investors create pool funds to back a start-up, or a private single investor may fund a venture.

Both would require a well-thought out, polished pitch and excellent business plans, along with the entrepreneur's personal value being equally conveyed. While they are for early-stage businesses, the risk profile for an investor is much higher and investment rounds tend to be smaller until the business has acquired customers, sales and/or proven itself to be a viable investment.


- Angel investors offer mentorship alongside capital for startups

- Angel investors are willing to take risks on business idea as they anticipate heavy return on investment from your startup


- Angel investors provide lower investment capital to business ideas compared to venture capitalists

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Venture Capital (VC)

Venture capital funds are managed by professionals that have a keen eye for seeking out companies with great prospects. VC is usually institutionally driven and often made up of funds from high net wealth individuals seeking opportunities to invest in medium to long term ventures.

These funds can carry up to $500 million in disposable investment money and often are looking at already established, highly scalable, global and unique businesses with proven success. Series A investment by VC is usually between $2-10 million, while series D can be over $100m in one round.

Their modus operandi involves them investing in a solid business rather than an equity. Once there is an IPO or acquisition of the business they are partnered with, they then pull out and seek other investments.


-Venture Capital effectively monitor the progress of a company they have invested in, thus ensuring the sustainability and growth of their investment.

- The mentorship and expertise venture capitals bring to the table can also sustain a business or company effectively

- Companies with astronomical growth rates such as Uber, Flipkart have a pre-designed exit strategy that enables them to reap huge profits that they can, in turn, re-invest in the growth of their company.


- Venture capital will remain loyal to your business till they have recovered their capital and profits. This usually occurs during a slim three to five-year timeframe

- You tend to lose control of your business since you're giving up a large part of it to venture capital investors

- Venture capital investors seek bigger companies with proven levels of stability and identifiable workforce. This could prove to be an obstacle for you because business startups don't usually have this level of stability. 

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Though it can come with caution as a new form of raising capital, crowdfunding platforms serve as brilliant platforms for connecting start-ups to public and private money. is a great example of crowdfunding, having raised $5 million. Not only does this raise capital and awareness about your brand, it’s also an opportunity to engage return customers. You should pay specific attention to what you are willing to provide and your businesses capacity to meet that.


- Crowdfunding essentially creates public interest for your business, thus running some free marketing and providing finance for your business at the same time

- Crowdfunding eliminates the intricacies involved in placing your business in the hands of an investor or a broker and wields that power to simpletons on the crowdfunding platform

- Has a potential to attract venture-capital investment as the business progresses.


- The heavy competition inherent in crowdfunding platforms can prove to be difficult if someone or people are pitching the same business idea as yours.

- If your business pitch isn't as solid as your competition, then there is a probability that your business idea will be overlooked or rejected 
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Business Incubators and Accelerators

Businesses that are just starting out can access funds provided by business incubators and accelerators.

The programs offered by them can be found in major cities across the globes.

Slight differences separate the terms "business incubators and accelerator". 

Core Difference

Business incubators basically nurture business while accelerators fast-track businesses. 


- Business owners receive mentorship from their investors

- Connections can be made with other startups


- During its 4-8 month lifespan, if commitment is lacking, the startup might spiral in a downward direction

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Contra service swapping

Instead of cash for growth, many start-ups will exchange goodwill and services with other entrepreneurs. I have personally done this many times, as I believe in giving to receive. Keep in mind that many service providers such as lawyers, designers, photographers and small scale vendors will also be willing to work on a goodwill basis. However, they will also have the expectation that once the venture grows and produces a profit, they will then become one of your loyal paid service providers.

Government Programmes

Government programmes that offer startup capital are an excellent way to source funding for your business. You are required to submit a plan that can be accepted by the grant committee. Once your plan has been scrutinized and approved, you will be provided with the funds to start up your business.


- Funding from government is usually substantial in size, thus providing you with surplus capital to manage your startup


- The process of scrutiny, approval and eventual release of funds may take a lot of time due to government bureaucracy
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Other Ways you can Raise Money for your Startup

Product Pre-Sale: An amazing way of raising funds for your business is through product pre-sale before launching your products officially. This builds consumer confidence in your brand and allows you to size up the demand for your product before its official launch.

Companies like Apple and Samsung adopt this procedure, allowing consumers to make pre-purchases before the official release of their products.

Selling Assets: Doing away with assets in your possession that have high financial value, can effectively serve as an immediate source of funding for your startup

Credit Cards: Business credit cards are an instant source of funding. New businesses that incur heavy expenditure can utilize credit cards as long as they fulfill the minimum payment requirement.

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