If you’ve had a brilliant idea, then you may be thinking about how to turn it into a business. Iggy Fenech has a chat with Zaar Crowdfunding manager Matthew Caruana to get his advice on startups.
Picture the scene: you’re out with friends one evening, when suddenly a fantastic idea strikes you for a business. It’s outstanding! Within weeks, you have solidified your plan, quit your job and are focusing on your idea full-time. Within months, your idea is a thriving start-up, with endless funding options and international interest. It’s a runaway success and you’re soon putting millions into the bank.
Admittedly, chances are your start-up story won’t be quite as plain-sailing, but you might as well dream. What is more likely is that your journey will involve quite a lot of hard work as you strive to take it from conception to triumph – and that fundraising could be quite a challenge.
In fact, financing is known to be one of the biggest pitfalls faced by startups everywhere, but there is a lot that you can do to get round that.
“There’s no doubt that creating revenue is one of the hardest part of getting your startup off the ground,” says Zaar.com.mt manager Matthew Caruana. “It might not be as easy as you think to get your first customers on board and to create traction around your business. You could have a fantastic idea and excellent implementation plans, but that doesn’t mean people will want to part with their hard-earned money in order to acquire it.”
Similarly, finding the right funding can prove to be quite a challenge in the early days. Aside from having your own savings or acquiring a loan from family or friends, there are only a few options open to you locally – namely getting a bank loan or finding an angel investor.
“Chances are you will need to secure funding to bridge the gap between your initial investment and when the money starts rolling in, and this is where crowdfunding can help,” Caruana says.
A crowdfunding campaign works by helping to generate the capital and revenue you need before other streams kick-in, usually because people can pre-buy your products or services. So, aside from raising much-needed funds, it also helps to validate your idea, as you can test it while getting feedback from the first potential customers.
“It’s win-win in that respect,” Caruana continues. “It gives you the time to alter your concept to better suit the market, tweak your prices and assess what can be done differently.”
If people find your idea interesting and they like what they see, they will fund it
Crowdfunding is a concept that has been gaining popularity in recent years, and it literally does what it says on the tin – creates funding by mobilising the interests of a crowd. You can create a campaign on a crowdfunding platform and raise funds for different aspects of your business, for instance by financing the research needed to get your idea off the ground, creating a prototype and buying raw materials.
“If people find your idea interesting and they like what they see, they will fund it,” Caruana continues. “The result is that you gain your funding, secure loyal customers and get proof of concept, both of which will help to propel your success further long-term.”
With that in mind, Zaar – Malta’s only crowdfunding platform – also provides other support for startups, including at its regular Crowdfunding Clinic. Here, entrepreneurs are given the time to share their ideas – both with the Zaar team and other like-minded individuals.
“This is ideal, and we find that it’s really useful for the different entrepreneurs to discuss their crowdfunding plans with one another, and to discover what works and what doesn’t. It’s excellent for suggestion-swapping and even builds a network for potential collaboration,” Caruana says.
Using Zaar also provides other potential benefits, such as helping to link startups with the ecosystem and business mentors who could provide invaluable advice in their particular field.
“We believe that finding a mentor is important for startups as it’s an opportunity to bounce ideas off them and even learn some tricks of the trade – not to mention the possible networking prospects that could lead to other things down the road.”
Finally, Caruana shares some advice about how startups can better their chances right from the beginning of their venture.
“When it comes to deciding on the product or service that you want to start-up, make sure you are solving a problem that people have. It helps to be able to clearly segment and define what your market wants. Focus on the benefits you need to deliver as this will determine what features you need , and will drive your marketing in the future. Try not to think of ‘everyone’ as your market, but to really tailor what you’re doing to fit more of a niche – this will make everything more direct, including securing funding,” Caruana adds.