Finance

How students can snag investors for new businesses

Where can students find investors and funding to launch a new business?

Written by Charlie Osborne, Contributing Writer June 16, 2012 at 11:51 p.m. PT

I used to work at a bar through my time at university. One day, I was serving a student who had just transferred from London. We ended up discussing the problem with the sheer amount of junk mail littered across campus -- from takeaways to taxis.

Campus officials were due to ban the activity as it had gotten out of hand -- but what would the companies then do?

A business was born -- and I had just met a long-term business partner. Why not produce large fridge magnets for companies to sponsor for space, and hand them out on campus instead? The problem was, of course, getting the initial capital for setting up the business.

In the UK, this meant registering at Company's House, setting up a business bank account, and then actually building the company -- from a website to meetings, prototype design and production. Studies aside, finding investment to kick-start a business can be difficult for any young entrepreneur. What ways can today's students exploit to fund their own ideas?

1.) Kickstarter

It isn't an instant formula for success, but the basic premise of the site has helped many a student bring a creative idea to fruition -- promote your idea, potentially raise enough funding to 'kickstart' the project.

Be enthusiastic, be honest, and put in the work. Introduce yourself, tell your story, and don't forget a very important component -- pull together the funds to create a video. That can be the ticket to going viral on social media, and therefore may result in press coverage, exposure and more backers.

Why not ask for a link to your Kickstarter page from your school or university?

2.) University grants

University belts have tightened further of late, but if you don't ask, you don't get. Some academic institutions make it their mission to promote innovation and entrepreneurialism -- perhaps on the hunt for the next Gates or Zuckerberg.

3.) Online grant opportunities

From specific city-based money pots to grants for women in particular industries, taking a few days to research what sponsorship exists online can be a way to boost your fledgling business.

4.) Events

A lot of work, but it can be particularly rewarding. When starting up a business with a friend in my third year of university, we decided to organize trips to the party hubs of Europe -- including Amsterdam and Prague. If you don't mind the stress levels and have a silver tongue to wheedle the best deals out of coach companies and hostels, then sending lorry-loads of your fellow students abroad can make you a tidy profit.

Consider merchandising your trips -- what about taking orders for hoodies advertising your exploits?

5.) Sponsorship

The possibilities are endless. From sponsorship of a sports team to placing a logo on merchandise or a website, larger and established companies are always looking for ways to further market their own businesses.

6.) Targeted markets

Consider the market your product or service is aimed at. If it's for a "good cause", why not see if local councils or groups would like to be involved? It may also be the case that companies may be interested in your gadget or experiment, as the results may help them improve their own businesses. If this is the case, sending a quick email and following up with a phone call can pay out dividends.

7.) Competitions

From Microsoft's Imagine Cup to local events, competitions can be a way to gain exposure for a new product or service, and potentially gain prize money to launch your business. Keep an eye on social networks including Twitter for competition updates, and company websites such as ifs for registration details and dates.

8.) Angel investors

Also known as "business angels" or "informal investors", angel investors are individuals that offer capital to invest in new start-ups in exchange for equity or convertible debt. In short, if the idea seems worthwhile and may prove profitable, an angel investor may choose to invest their own funds.

9.) Venture Capitalists

These types of investors are different -- instead of individuals investing their own money, venture capitalists are generally in charge of a formal fund. As a "venture", this kind of investment focuses on high-risk, early stage businesses -- but due to this, investors may require a high amount of equity to be enticed to invest.

10.) Most importantly: Know your business inside out.

You must have a clear, precise business plan in place. Turnover, revenue, cash flow, profit margin, target market -- all of these terms should be familiar. If you do not know where your business could be in a year, standing in front of someone and asking them to give you money is unlikely to be successful. Expect to dedicate time once spent sleeping on growing your business. It'll be hard, but in a time where more and more people are looking for ways to earn their living outside of traditional employment, research and dedication are key.

Image credit: Victor

Related:

Editorial standards

Show Comments