2.4

Start-up financing:Who will pay your rent?

You don?t believe that your project is about money, but rather about its impact on society? It is actually about both. After all, somebody ultimately has to pay for every project. A project?s future viability also means its financial sustainability. At some point, customers may pay for your offer. Or you may find financial backers who will support you in the long term. At the outset, however, initial financial support is invariably required and this doesn?t just fall from the sky. You therefore not only have to believe in your idea, but rather also have to be able to sell it. Think of people and organisations who would be positive about your project AND have money.

Example VillageOffice

With what start-up financing did VillageOffice begin? At the start, everyone involved had an income from other activities that covered their living costs. They were therefore able to take on the risk that a pioneering project entails. And what?s more: all of the founders made a deposit of CHF 10,000 for the required cooperative capital. To begin with, nobody charged any hours either. Payment was only provided for expenses.

Two milestones then followed with respect to financing:

  • 1.

    VillageOffice obtained start-up financing from the Alternative Bank Innovation Fund. Following this, everyone received a basic salary, irrespective of the exact number of hours they spent on the project. Although this salary was still symbolic in nature, it was now possible to really get going and significantly expand the network.

  • 2.

    VillageOffice was then discovered and supported by the Migros Pioneer Fund. This meant that the most important participants were able to focus fully on the pioneering project for three years. This provided the project with the stability required to successfully manage the challenging first few years of its existence.

My 0 to 100 moment:

You find your first partners in crime who believe in your idea.

How it works

Possible sources:

From where and from whom will the required funds come? And how can you convince potential financial backers?

Foundations Some support a few projects with large contributions, while others offer support to many projects with minor contributions.

Sponsorship If companies or brands are able to benefit from your activities or reputation, you can sell this prospect to them – although in most cases this is first possible much further down the road.

Crowdfunding Your first supporters are often like-minded individuals who really want to see your idea get off the ground.

Customers People to whom your offer is so valuable they are willing to pay for it – perhaps even in advance.

Family, friends and others These are often the people who are the quickest to convince about your idea. And in many cases they also support the founders with motivating words if things are not going completely to plan.

Investors Investors are profit-oriented and may be considered, depending on your idea. In most cases, however, this will only be an option if there are signs your idea is starting to take off.

And the best way to sell your idea:

You defined your impact chain in section 1.4. This provides the best basis for your sales pitch.

Trick

Split your project into thematic sub-projects. This simplifies the financing process.

It is not uncommon for the required start-up capital to be made up of several smaller contributions that are also not always promised at the same time. Each new backer will jump at the opportunity to get involved with very different topics and objectives.

Start-up financing:

with this exercise, you will find out why somebody should finance your project launch.

Financing (PDF)