No entrepreneur wants to admit that financing a company is a really tough challenge. This holds true for companies with multi-year operating histories as well as startups. After realizing this point back the 1980s, I started collecting examples of creative financing techniques. There's a solution for almost any situation and this is an example of one.
A chocolate company in the UK is raising capital by issuing bonds which pay the bearer in chocolates rather than in interest:
Holders of the £2,000 Chocolate Bond will receive six free Tasting Boxes
a year worth £107.70 per year which is equivalent to a 5.38% return
(6.72% gross return for a basic rate taxpayer) and those holding the
£4,000 Chocolate Bond will receive 13 free Tasting Boxes – a full year’s
supply! Worth £233.35 per year which is equivalent to a 5.83% return
(7.29% gross return for a basic rate taxpayer). (source)
If you run a website for startup financing you see a lot of startups over the course of a week. Every last one is convinced that it is doing something unique or that at the very least it is only the second company in the space. Meanwhile, it's the third company with the same basic idea that I have spoken to just that week.
How to Raise Startup Capital: Lessons From Deal-makers
From working with entrepreneurs since 1986, I have noticed one
glaring problem most have. Most have no idea how to sell their startup
or deal to investors. Instead they just write a business plan and shotgun it out
to everyone. Then after a few months, when no one has jumped on it, they
start complaining that investors are "too stupid" to see how wonderful the investment opportunity really is.
What rookies fail to take into
consideration are tangible economic incentives and psychology. Deal-makers,
on the other hand, understand how to offer short-term economic incentives
made all the stronger by appealing to psychological needs.
like to learn how to put together B2B deals? If you answered, yes, get a copy
of How Deal-makers Raise Capital.
There's no information on this new book on raising money on Amazon yet, but even if it's only half as good as his other business classic, it will be a worthwhile addition to any entrepreneur's library.
Free Mini-Course in Creative Financing for Startup Entrepreneurs
Are you an Entrepreneurial Champ or Chump? Find out.
Champs are the ones who understand how entrepreneurial finance works. Chumps are those who sit around hoping that some kind stranger will give them money after reading their business plan. When it doesn't happen, they complain about investors being "too stupid." You can increase your chances of being successful in attracting capital down the road if you learn how savvy entrepreneurs are always moving their companies forward.