To start a business, the need for financing is sorely felt. However, bank loans are not always suitable for your business. Today there are more and more alternatives to the bank loan which can, depending on your needs and your abilities, represent a more interesting financial contribution for you.
The principle of love money is simple and undeniable: to raise your first funds, you can appeal to the generosity of those around you.
The pluses: it’s a quick and effective solution when launching your fundraising campaign. You don’t need to invest your time and energy for the long term and can integrate these funds directly into your cash flow. Moreover, love money is the simplest solution: no need to prove the relevance of your project with long presentations. A non-negotiable saving of time and energy!
Cons: those around you only want one thing: to help you. However, the funds it has available to provide you with financial support are not expandable.
The principle of crowdfunding is simple: appeal to as many people as possible to finance your activity. There are many formulas: donation/against donation, loan. It’s up to you to choose the one that best suits your business. Crowdfunding is done in stages: first, address your entourage, then your acquaintances and finally, the general public.
The pluses: when you appeal to the general public, you don’t need a big business plan. You can introduce yourself and present your project in a more playful and creative tone. The virality of your project and its presentation can give very good results: many small businesses have emerged thanks to crowdfunding.
Cons: You will have to devote a lot of time to it: the average duration of a collection is two months (you have to devote an average of 2 hours a day to it). It is difficult to raise all of these funds this way: crowdfunding professionals will help you determine the maximum amount you can hope for. Finally, the key to a good campaign is good communication. If communication is not your forte, you will need help.
These investors are individuals who invest part of their equity in an innovative, unlisted company with high growth potential. They intervene at the beginning of the commercial activity of the start-up.
The pluses: these angels lend you funds, but also support, a network and advice. Business Angels are fine connoisseurs of entrepreneurship, so they are able to help you. In addition, depending on the case, you can call on a single person to raise all the funds you need to get started.
Cons: looking for Business Angels takes a lot of time and energy (about a year). From the project of association with a Business Angel to the signature, you will have to go through many stages: drafting the business plan, presentation of the project before several committees, making contact with the Business Angels. In addition, it is advisable not to disperse and to seek people who are in your environment: the world of Business Angels is small!
Conclusion: love money represents a preliminary to the search for funds. Crowdfunding (which also uses the principle of love money) will help you broaden your fields of donors. It represents a good solution for an average request for funds. Business Angels come in later, require a whole different approach and can bring you a lot of money.