Sources of funding for startups

September 22, 2018

So, you have thought long and hard of starting your own business, becoming a corporate business, so to say. You are fed up with your boss and want to leave your job. You want to start and electronics recycling business, which revolves around recycling all the equipment related to electronics. E-waste, as it is termed as, is an electrical device or electronic equipment that has been turned into junk, or rendered useless to the user. It includes all Information and Communication Technologies (ICT), i.e., personal computers, mobile phones, tablets, laptops, monitors, keyboards, mice, batteries, hard disk drives, CD drives, printed circuit boards, chargers, peripherals, headphones, modems, and other accessories, etc. It also includes home appliances like TVs, refrigerators, microwave ovens, air conditioners, electric heaters, washing machines, electric fans, toaster ovens, blenders, electric kettles, electric stoves, food processors, electric mixers, vacuum cleaners, radios, DVD/video players, cookers, etc. Tube lights, bulbs, lamps, electronic toys, sports, batteries, hair blowers, etc. are also incorporated in E-waste.

Why recycling E-waste is a good idea?

Recycling E-waste is not only healthy for the environment but also has a great business prospect. E-waste, which is also known as ‘Waste Electrical and Electronic Equipment’ (WEEE), if not dealt with correctly leads to pollution which eventually is harmful to humans. Therefore, you kill two birds with one stone by recycling E-waste, and that’s one of the reasons why this trend is increasing. Moreover, as the number of electronic devices is increasing day by day, so is the waste associated with them. Nowadays, everything is being automated by a machine or device; more people now have some sort of electronic devices accompanying them. So, the need for proper E-waste removal is greater now, probably more than ever. Consequently, adopting an electronics recycling startup is one of the best entrepreneurial ideas.

Recycling smartphones

In the modern area, the smartphone has become a compulsion for almost everyone. That’s why you see so many brands of smartphones, with new brands coming regularly. You will find everyone around you using a smartphone. So, there are a lot of customers looking to sell their old or broker phone in exchange for some cash to get a new one. Even flagship phones like Apple’s iPhone are sold for recycling. Especially, users who have their iPhone’s screen broken are continuously looking to get rid of their phone. Those users who had the bad experience of seeing their phone fall search online to sell their cracked iPhone for recycling. Therefore, it is a great opportunity for startups to get into the smartphone recycling business as they are the most widely used electronic device right now.

E-waste recycling plant

You can start by developing a small E-waste recycling plant and then grow your way through. You need to define the WEEE volume, level of recycling, number of staff members, electricity and maintenance requirement, raw materials and level of automation as some of the key things. Of course, they depend upon your capital, but it is up to you to decide which sort of level you want to start your business from. Also, you need to have a definite plan in place for future milestones, for that you need to forecast by doing the market analysis.

You have developed a perfect plan that you think is bound to succeed. However, the only thing keeping you from success is the scarcity of resources.

Stats tell us that most of the startups perish within their first year of working, mainly due to unavailability of funds. Capital is the basic need for any startup to continue. Even the greatest of ideas are nothing if they aren’t put to action. And it is the working capital that ensures that all dues are met and your infant business and continue to grow.

No need to worry! There are plenty of ways you can collect the much-needed investment for your business if you just know the right place to look to. You need to conduct a thorough market analysis to obtain the required capital for your startup.

Fortunately, we are here to guide you through the options that you may have for financial backing. We discuss some of the best and reliable methods of collecting funds for your startup.

  1. Personal or mutual funds

The first and probably the obvious mean of starting your business is by investing your own money. Or through mutual funds, if you have one or two partners. Research suggests that a startup is likely to succeed if you have a team of two or three partners. It is highly imperative that you a considerable amount saved or borrowed from a family member before starting on this venture. This process is also known as self-funding.

This type of funding has some major advantages. First, it has no strings attached. You don’t have to worry about taxation and other government stuff. Secondly, when you invest your own money, you are more motivated to work and to make your venture a success as you don’t want to waste your money. The capital is accessible as you can draw money anytime you want. However, if you are starting your business at a larger scale, then you might need to look for other sources of funding. Moreover, you have to take extra while doing business with your friends or family members as things might not go as smoothly as you may have predicted.

  1. Crowdfunding

Crowdfunding is another effective source of collecting funds. We are living in an era where social media is more active than ever. There are plenty of online platforms where you can pitch your idea and see if it catches fire. You have to post a complete business model of your idea and make it as compelling for the investors as possible. The individuals on these platforms will go through these ideas and see if they have the potential to be successful in the future. Crowdfunding also serves as a great marketing strategy as word about your idea will reach more and more people. You will remain in control of your business as you won’t have to deal with those cunning investors. Moreover, you can also attract venture capitalists for your business. However, it is not easy to attract the crowd’s attention as there will be many competitor ideas too. There is a great possibility that your idea might be rejected by the masses.

  1. Angel Investment

Have you wondered does something like an angel exists? Well, they do in business. Angel investors are old businessmen or wealthy individuals who are looking to invest their money in a promising startup as themselves have retired from this sort of field. There are organizations that help new startups with their funding comprised of these angels. They not only contribute money but also impart critical management and technical knowledge. In exchange for their money, they want a supervisory role, for example, a seat on the board of directors. Famous angel organizations like Investor’s Circle, National Angel Capital Organization (NACO), Tech Coast Angels, Golden Seeds LLC, etc. help startups by providing funds needed to cover the operating charges of the company. You can check to see which angel organizations are operating in your region.

  1. Venture Capital

Another source of startup funding is venture capital. A venture capitalist is a group of professionals who invest money in startups that are technology related and can produce healthy returns. They would also want a certain percentage of the company’s equity in exchange for the investment. They don’t invest in all startups, and that’s you as an entrepreneur should always have other sources of funding too. If you have a large-scale startup, this type of funding is an ideal source for you. Venture capitalists can also bring years of valuable experience to the company. They have a vested interest in the company, so they carefully monitor the proceedings of the startup. But you have to be careful here as you don’t want to lose control of the company. Venture capitalists have an exit strategy pre-defined before investing. Once they get their investment back with interest (or not), they leave the business to successfully invest in another one. Another catch is that you need to have a stable working environment as these investors are looking for stability. However, most startups don’t have that kind of stability at the beginning.

  1. Incubators or Accelerators

Startups that have just started their venture can benefit a lot from business incubators or accelerators. They provide startup funding in the form of capital, land, equipment or labor. They are scattered all around the globe providing their services to various startups. Usually, there is a contract-based partnership between the two parties for a certain period. During the period, the incubator may provide service like allowing the use of their manufacturing plant for the development of the certain product. Or renting out area for the recycling equipment of an electronics recycling startup. During the period you may also receive technical or managerial support. There are some startup training and development programs that quite beneficial. However, if at any point the incubator pulls out of the contract then it can prove to be a killing blow for the infant business.

  1. Bank Loans

Entrepreneurs can also loan the required funding for their startup from a bank. There are some banks that offer loans at interest (or not). The bank would require a business plan of the startup, forecasting, and assurances before they issue out any amount. You need to prove that you are credible so that bank can trust you with their money. It is good to speed up the growth of your company. You may have to provide certain leverage to the bank in case you fail to pay the money back. So, the risk is high, and it can also prove to be a motivating factor. Find the banks in your area that can loan you the amount you need so that you can kick-start your business.

  1. Government programs and grants

The government often announces policies to facilitate investment for new startups. There certain programs at the federal and provincial stage that provide grants to businesses. It is a two-way relationship. Since the revenue generated by any business will circulate in the economy and will be beneficial for the state. You would be required to present your project in front of a committee, and they would decide if you are eligible for the grant or not. Once you are selected the funds will be granted, and your growth will be monitored. However, the competition can be fierce and finding the funds can be tough. Also, the government procedures usually take more time due to political complications, etc. and therefore, you might have to wait for some time.

  1. Winning competitions

Technological competitions are conducted by many multi-national corporations which allow you to display your talent. You can win a hefty amount through these contests. Moreover, you will get the much-needed exposure with other startups, the industry, and the investors. Often media coverage is done for these events so that you can take your publicity to a whole new level. However, again the competition can be tough and losing such a high-profile event can leave you demoralized. But it should be taken as a motivating factor with a continuous desire to improve. However, don’t depend on it and always have other options for funding available to you.

  1. Search for startup help online

There are many online sites available online that assist new startups. You can find a significant amount from these online companies. It is better to look out for sites that will leak your information or idea. Just search online and perform a thorough checking before opting for any of these sites.

These are some of the techniques that you can use to kick-start your E-waste recycling business. Again, you have a vision, once have a definite plan you can go for any of these methods. It is up to you to decide which of these methods is best for you. By performing market analysis, catering demographics and other economic factors, you can come upon necessary sources of funding.

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