Episode 10, how to get funding. Welcome to the beer on bus podcast the
young entrepreneurs guide to starting a business, whether you're thinking about
business for the first time or you have an idea that you want to develop then
this is the podcast for you . I'm Mari and I'll be guiding you through this 15
part series that will keep you on track and help you think through the
challenges that come with starting a business. Part of the Welsh Government's
Business Wales service, Big Ideas Wales raises aspirations and supports young
entrepreneurs ambitions for business. Part funded by the European Regional
Development Fund Big Ideas Wales supports young people through online
resources, business skills workshops and one-to-one sessions with an advisor to
help your ideas become a reality. To get in touch with us you can like and follow
us on Facebook, Twitter and Instagram. Message us and one of the team will get
back to you, call us via the helpline on 03000 6 03000.
Live chat on the Business Wales website or you can email us bigideas@gov.wales
Its episode 10 of the be your own boss podcast, first let's recap on
episode nine where I talked about starting your business on a shoestring
and gave you all some helpful tips. Open on a lean model, rent space or equipment,
use marketplaces that already exist and of course use the skills and people
around you. Not every business can be bootstrapped sometimes you need money to
get started so let's talk funding. A scary process I know but don't worry in
this chapter I'll talk you through what's available and where to find it.
So let's begin, we're not going to lie to you getting funding is not easy
especially if you're new to business but you might need money to buy materials,
equipment, stock, premises or all of the above in order to get started. The good
news is there are now more sources of business funding than ever before and we
can help show you the way. Some of the options for funding you could look into
are family, you may find that your family are in a position
to help you out if they can invest some money into your business and realise
that they may not see it again then great because it's a good way to get
started, just to warn you though it can put a strain on relationships and
borrowing from your loved ones isn't always possible so think it
through carefully before you take this route. Your bank, this is a good place to
start but getting a bank loan or overdraft can be difficult also it's a
good idea to shop around to try and the best deal if opening a business account,
always keep your bank manager informed they might even have some good advice
for you and will refer you to other lenders if they turn you down this is where your
business plan comes in remember it needs to be good. Startup loans, right now there
are government backed personal loans for individuals who are 18 or over and
they're looking to start or grow their own business
you can borrow between five hundred and twenty five thousand pounds for a fixed
rates of six percent per annum. In Wales the loans are administered by business
Wales who can also provide you with support throughout the application
process and beyond. It is worth noting that applicants are judged by the
viability of their business plan.told you it was important. Angel investors,
they work closely with businesses providing support as well as funding in
exchange for equity. Crowdfunding, here peer-to-peer lending allows businesses
to raise money from large groups of private investors online either in
exchange for equity or for benefits such as discounts or freebies. Popular
crowdfunding websites include Crowdcube, Kickstarter, Funding Circle and Cedars
and there's more on our website so go and check it out. The Prince's Trust, they
offer loans and in very rare occasions grants too for unemployed young people
that are looking to set up in business. As a start-up loans provider they can
offer loans up to 5,000 pounds for eligible young people who have yes you
guessed it a viable business plan, there's that business plan again. Startup
grants and bursaries, these are occasionally offered by the government,
local authorities and trusts grants are often used to support business growth,
employment opportunities all linked to specific sectors. Speak to your business
advisor who can keep you informed of your finance options or visit the
Business Wales finance locator. I've got another set of top tips for you again
but this time on funding so let's begin. One, you need to be specific on the type
of funding you want, ask yourself what am I looking for? How much do I need?
Two, describe your business idea clearly you might understand your business idea but
investors won't unless you are really clear, you're passionate about your idea
so make sure you leave the investors with the same feeling. Three, show that you
know your target market, if you've done your market research right then you'll
know all of this so show it off. Four, have a good realistic business plan and
budget don't just pluck figures out of the air you have to be realistic but
also aim high, you want to make sure your business will succeed and you need to
make sure everyone can see this. Five, ever heard the saying
practice makes perfect? Well it's true so make sure you practice your pitch,
practice in front of friends, family, groups and individuals in fact to anyone
who will listen including the dog. You know your business
idea inside out so make sure your audience leaves the pitch feeling the
same way. It's time to hear from one of our role models this week let's hear
from Daniel Swygart from Alpacr.
ML: Hiya Dan
DS: Hello
ML: You ok
DS: I'm good how are you?
ML: Good thanks, now first of all introduce yourself and tell us about your business.
DS: Yes my name's Dan I'm the founder and CEO of Alpacr so Alpacr is a brand new
social networking platform that connects the world through travel and adventure.
ML: Well sounds very interesting tell us a bit more what exactly do you do
DS: Yeah okay so it's basically a simple platform that
connects the aspects of Instagram, TripAdvisor, Tinder and Pinterest
all-in-one for travel and adventure so whether that's posting content searching
a few places to go and visit following friends or even meeting up with people
whilst traveling Alpacr is that single social network for you
ML: Wow and how did you come come up with this idea
DS: So I started out Alpacr in my
final year of university at the time I was doing a lot of traveling so I was
going around America, Europe I was using over ten different apps so basically I
wanted one simple social app that had all those in one that's really where the
idea came from at the start.
ML: Did you ever imagine it would grow to be a business
thing and your job or was it just a sort of dream to begin with how did you turn
that into a reality?
DS: Yeah so the start it was very much I'll
see how far it because at the time out in University I just came up with a brief
business idea I then entered into a competition after that competition I
thought you know I may as well make this idea bigger so I made a big business
plan and after that I thought I may as well get this app made after that I thought
may as well launch it so it's just that by step got bigger and bigger and bigger
and now it's just ingulfed my life
ML: What would you say has been the most
difficult aspect of starting your own business?
DS: For me it was raising
investment and that's because I've got no prior experience so you know I just
was in University I had no job experience no experience running a business and had
to raise investments get started so at the moment I'm 23, we've raised a hundred
and sixty thousand and we're just about to close over a three hundred thousand
pound raise but for me the hardest part is convincing people to invest in you
when you've got no prior experience and you have to really sell yourself and get out
there talk to as many people as possible and just ignore people who say no or
learn from why they said no and just develop yourself personally as well
whilst raising investment then I learnt a lot of things along the way there's a
few companies out there that can help you out with gaining investment
introducing you to investors so one thing one company I found really helpful
was angel investment network so angelinvestmentnetwork.co.uk
but they have websites all over the world in different countries so you post
your pitch on there your business plan it's very cheap you just pay I think a
couple hundred pounds and that gets blasted out to thousands of investors
all around the world and off the back of that we've raised almost all of our half
a million dollars of investment that we've raised to date was from that
platform, similarly a lot of my friends who are entrepreneurs they've raised
millions off there as well so that's very very good I highly
recommend that other than tha locally there'll be loads of angel
investment companies or angel investors themselves so just reach out to
as many people as possible in your local area and then work your way up to other
people in the country or internationally wherever you feel best fitting or where
the best investors are for you another big important bit of advice is choose
your investors wisely and a lot of people say choose your investor more
wisely than your wife or your husband because you can easily get a divorce but
you can't divorce your investor so make sure you find the right investor for you
ML: And it's really important to get that right is it did you have any help from
anyone or?
DS: Yeah I mean the biggest thing was I was in a few incubators so I was
talking to a lot of other entrepreneurs learning what they did how they did
things listening to a lot of podcasts, YouTube videos and just learn from other
entrepreneurs learn from their mistakes from their successes and you learn quickly how
to do things and the biggest thing with raising investment is you need to make a very
good pitch deck so instead of a business plan in school teach you to have you know 10
page 100 page business plan, throw that out the window you don't need it what you
need is a pitch deck so it's like 20 slides simply saying what the idea is
what you do your team, marketing plan, strategy everything like that all the
information in one simple PowerPoint presentation and you send that to
investors and then they ask questions from it you don't need to write you know
essays and essays of what you'll do no one's going to read that so that's one
thing I learned coming out of university quite quick
ML: And how important was it
that obviously it's something that was so you were passionate about because
you've been traveling so you knew that this idea could work and something that
you would use did that help you and you're trying to sell it to other people
DS: Yeah that's also a big drive I wanted to be and my division for what
it would do the other thing would be was I was finishing University and I had
well I kept getting rejected from jobs I was also applying to lots of grad schemes kept
get rejected so I thought you know what Ill just make my own company it'd be much
easier so I started that way that really pushed me over the line so I think a lot
of people they have an idea but there's no nothing to force them to continue to
do it so that for me was something I had nothing else to do with what may as well
just start my own business
ML: So that motivated you in a way to keep working at
it what advice would you give now to yourself maybe if you look back at that
beginning of the journey what will you tell yourself or what would you do
differently maybe
DS: Doing it again once you've already done it
you can cut corners go quite quick so you know everything I did within you know a year I
could do now within a few weeks and so obviously there's that aspect of it but
you don't know until you've learnt it so I couldn't have been improved in any way
back then but the biggest thing with investment is take your time reach out to
as many people as possible don't get down when someone says no because they
will say no loads of people do I remember when we first raised our first
investment round I emailed and reached out to pitched to over 400 people 400
investors five of which invested so that's the kind of you got just keep
going keep going and never give up and I've been in situations twice now
where we've run out of money my team have to get part-time work I'm not on
any wage and it's difficult but every entrepreneur every big successful business
goes to these times and it's important that you know you learn from them and
you get closer together and you drive forward and you learn how to get out of them
ML: And how do you decide who to reach out to it to try and find these investors
DS: Could be someone in your field so you know if you're in a specific
industry look at industry experts but for me is literally because we're so
niche you know social network obviously it's not big not loads of businesses
basically in that sector especially in UK predominatly in America we I'd
literally just reached out to anyone and everyone so I reached out to the CEO of
Admiral in Cardiff CEO of open genius in Cardiff Bay I pitched to these investors
whilst I was in university they didn't invest but they helped me out externally they introduced me to
new people eventually some of them invested as well so yeah it literally
just speak to as many people as possible learn how to improve things learn what
they think about it and you never know they might invest or they might
introduce you someone else but you don't know till you put yourself out there
ML: Definitely and how have competitions helped you along the way as well
DS: So just after I graduated from university we won the virgin voom competition so that was
hosted by Sir Richard Branson so we won 5,000 pounds and I had breakfast with
Branson in London that was good obviously on a personal level to learn
from such a great entrepreneur and for him to give advice to us personally on
how to move forward and also before that I was just a student with no backgrounds
now I was an award-winning student I sort of gave me credibility with his
name behind us which enabled us to raise more investment as well
ML: Yeah I'm sure
and having breakfast with him wow that must have been surreal
DS: It was sorry
ML: What did he
tell you was there anything that that's stuck with you
DS: He was mainly talking about
keeping control of your business obviously we're raising a lot of
investment we will probably raise you know in the future several million
before we could become self-sustainable with revenue so he said just you
know make sure you keep enough equity to maintain control so
it's still your your business your baby he also gave a lot of masking advice as
well to look after your own community so that could be a start you know your
employees all those first customers and as you get bigger and bigger and now you
know he's a multi-billionaire with big companies that circle he looks after is
huge and whether that's the guys who work for him his customers he needs to make sure
he looks after everybody and they'll look after him so thats another thing that
really hit home for me
ML: Yeah well it sounds very exciting where do you see
Alpacr going now?
DS: So we've got an incredible team my non non exec director
is Tyler Droll he's the former CEO of Yik yak they're worth 400 million
dollars after one year there is 74 million in venture capital investment
from Silicon Valley my co-founder hes go over 12 years experience in software
development so overall we've got team of 12 at the moment where we all see it going
and our investors is we want our Alpacr to be the single social platform of travel
and adventure so you know whether you're going skiing you going on a gap here for
six months you're going on a trip abroad for a week in Paris
Alpacr is that single social network that you know you have to use and our aim overall
is for a buyout so we've already pitched to Facebook got interests from them for
the incubator so the aim is for them to buy us out investors are aiming for 100
million to between five hundred seven hundred million dollars thats yeah that's the
goal the vision of Alpacr
ML: Well I can see I can feel the drive and the energy
behind it so all the luck in the world not that you need it
DS: Diolch
ML: Diolch am yr sgwrs, thank you.
Now you know what types of funding are out there and
what you need to do it might be time to talk prices and how to calculate them so
to find out more make sure you listen to the next episode. To get in touch with us
you can like and follow us on Facebook, Twitter and Instagram. Message us and one
of the team will get back to you call us via the helpline on 03000 6 03000
Live chat on the Business Wales website or send us an email
bigideas@gov.wales
Don't forget to get in touch with any questions you may have.