Maryrose Lyons blogging since 2003...

5 Ways To Get Funding For Your Business… Plus 1 Really Good One

March 23, 2009 at 4:11 pm

1.    Enterprise Ireland

Often the first port of call for technology start ups, and of course they say they welcome approaches from “anyone with a good idea”.   They have to.  They are the Government’s funding hand-out body and they can’t be seen to discriminate against any good ideas.

If your idea is really wacky, you might find it hard to get money out of EI.   They’re not known to be great risk-takers, and it’s staffed by civil servants who may not necessarily understand new and emerging technologies.

Plus, despite there being a variety of funding options available you’ve got to jump through certain hoops in order to get your hands on them.  Many EI recipients of funding will tell you that the paperwork is arduous and in some cases, the time cost of completing the paperwork is greater than the value of the sums received.

2.    Enterprise Boards

The enterprise boards are located around the country.  Find your local enterprise board.
They are part funded by the Government and the European Regional Development Fund and their goal is to assist new business start-ups through funding, training and mentoring.   Training and mentoring is all very well, but if it’s money you’re after, you can go for the following funding from your local enterprise board:

• Feasibility grants – money to investigate the potential of your idea, maximum €7,500.
• Capital grants – up to a maximum of €75,000 if you’re investing in machinery and equipment or altering your business premises, this can be helpful.
• Employment grants – up to €7,500 can cover part of a salary – a very small part.

Enterprise boards tend to spread their net wide, preferring to help many businesses with smaller amounts of money so note that the amounts shown above are upper limits – in practice you’ll probably get a lot less.  You’re also facing the same issues as with EI in terms of paperwork and avoidance of risky decisions.  Although the Board of your local enterprise board will be made up of some private sector people, they tend to be bank managers who are not known to be most tech savvy.

If you’re in with the enterprise boards, you’ll be eligible to take part in the Redeemable Preference Share Scheme.   It’s like a repayable grant but no ownership rights are passed to the enterprise board.

3.    Banks

Given that banks are in crisis, it’s highly unlikely that you’ll be able to get any money out of them.

In the glory days of the Celtic Tiger, banks were handing out cash willy nilly.  Apply for a car loan and you’d be offered triple  the amount you applied for “in case you might need it”.  As a result, many people accepted loans from the banks and bought cars and consumables way beyond what they could actually afford.  

But approach your local bank with an innovative technology idea, no track record of working for yourself, and not even a full year’s turnover, and the chances are you’d be laughed out of it.  Even back then.

Back in the days before the Irish people had to bail out the banks, if you lied and said you wanted a swanky new Audi A4, you’d probably have gotten the funding.   If you said you were starting up Twitter and told your bank manager that your app was going to set the world on fire, you probably wouldn’t have got anything.
“You’re doing what with 140 characters?”

4.    Friends & Family

People who love you believe in you.  If you really love them, don’t borrow money off them.

Borrowing money off friends and family is only desirable if the investor in question has no risk attached to the funds, is quite happy to sit on the sidelines and not meddle in your business.  Uncle Tommy’s ideas on web design might not be what your business needs.

But given that all the people who had the money are now broke or feeling like they are, it’s very unlikely you’ll find someone like this to invest in your business.

5.    Venture Capitalists

Venture capitalists invest in businesses they see as having potential.  Representing the extremely high-risk end of the equities market, they are under pressure to bring home equally high returns for their investors.

They aren’t interested in you if you’re looking for less than a cool million.  And if do manage to get your hands on some VC funding, you’re likely to pay a high price in terms of equity and control of the future direction of the business.

Horror stories abound about VC’s pushing start-up MD’s out of their own businesses.  These guys are the barracudas of the funding world – sleek and shiny, always skimming around near the top, but they’d bite your hand off given a chance.
If you do wish to go down the CV route, they are represented in Ireland by the Irish Venture Capitalist Association.  You’d think their website would be a good place to start, but looking at it, you might think again!

And Now For The Good News!

This week IQ Content is announcing the details of the IQ Content Prize.
What’s the prize? €10,000 to help turn a good idea into a great business.
What’s the catch? There is none.  No equity handover.  No strings attached.  It seems these really are the good guys!

The application process has already been communicated and it looks mighty lean.  They’ve stated that they’re going to keep the application process really simple, with a low barrier to entry.  Enterprise Ireland take note!

Closing date for entries is 8 May.  A shortlist will be announced on 10 June, you could find yourself giving your pitch on to IQ on 25 June. By August you could be working on the information architecture of your own creation. Imagine what you may achieve by this time next year!

So what’s stopping you?

Now’s your chance to get your hands on some easy dosh!   If you have an idea bubbling around your head and you’d like to take it to the next level, visit the iq prize website on Wednesday and find out how to you can get started.

Good luck!

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Tags: iq content prize, sources of technology funding ireland