5 crucial sources of funding for upcoming businesses

by | Feb 7, 2017

Raising capital has always been an issue when starting a business. One of the biggest mistakes you can ever make in starting a business is to do so without any source of funding. If you are still looking for funding sources, here is how to access them.

Your pockets

The easiest way to raise funds is to acquire and save up funds. If you have a job, don’t quit until your business is running smoothly. Find a way to balance your work with your business for the time being. This will afford you the opportunity to get some basic things done.

Things like company registration, brand identity and startup capital can be sorted out with these funds you set aside. Bootstrapping is one of the most effective and inexpensive ways to ensure a business’ positive cash flow.


Bootstrapping means less money has to be borrowed and interest costs are reduced. Most startups in Nigeria started by bootstrapping, working through the Lean Startup model.

Discover: The Lean Startup model

One major prerogative is to build a product that works; it will sell itself. Bootstrapping becomes easier when you follow this rule.

Family and friends

Most times when starting out, you need your family and friends to believe in you. As they are the first set of people who would validate your idea and support you.  You can ask them for support both technical and in funds capacity. They serve as a cushion effect to get your idea actualized. Get them to believe in your idea, it prepares you in a certain way.

Suggested ReadMy Mum Raided her Retirement Account to fund my company – Femi Akinde

Business Loans

Before we proceed, you should note that there are many loan structures. The golden rule for proper utilisation of loans is that long terms funds should be invested in long term businesses and short-term funds should be invested in a short-term business.

A departure from the rule can cause serious liquidity problems. If an asset can only pay back in 10 years, it will be a bad financing decision to raise a loan that will be repaid in 5 years to purchase it. This would mean that the money to repay the loan would come from somewhere as the asset would not generate cash enough to repay the loan in the first 5 years of its life.


In choosing among the variety of options one would also have to consider the cost of capital and of course the risk factor. Some banks are willing to support MSME’s with loan structures and they will advise on what suits your business.

Suggested ReadTop 5 Commercial Banks that Nigerian SMEs can bank on


naira vs dollar

Photo Credit: majjed2008 Flickr via Compfight cc

Grants are a type of financial aid that do not have to be repaid. Generally, grants are for non-profit charitable organisations but things are changing these days. Grants have become one of the safest means of getting capital but they are only gotten by people who are adding value to the society. A case in point is CivicTech startup BudgIT, which recently received $3m in grants.

Suggested Read: BudgIT raises $3 million grant from Omidyar Network and Gates Foundation

So you might want to try your hands on grants this year.


Investment is the commitment and utilisation of funds in a company with the expectation that it will generate returns. Because funds and other resources are scarce and their opportunity cost very high, investment becomes one of the only options. This is so because, any decision taken in this respect, whether rightly or wrongly, has a lasting effect on the future growth of the company.

Getting investors or seed funds for your business is not a bad idea especially if you think your idea is “too big” to be bootstrapped. But you should be ready to give away some equity in return.

DiscoverLocal Capital Firms investing in Nigerian startups

In any case, to avoid the danger of faulty investment decision, it becomes necessary to review very carefully the financing of the company and the expected returns on investment.


From experience, it is safer to start small and scale enough to attract the right investments and grants. The first two options are for those who want to bootstrap or follow the lean startup model while the last two are for those who want to scale and raise more capital funding.

What works is the combination of all options throughout the phase of your business.

Nifemi Akinwamide
Nifemi Akinwamide

Building interesting stuff at Kudi.

Are you in tech and you are looking at getting a foreign remote job or you want to move abroad? Fill this form and you will get the BEST resources to help you get that high paying remote job as well as japa easily! WAGMI!

Notify of
1 Comment
Newest Most Voted
Inline Feedbacks
View all comments
Robery Ward
Robery Ward
5 years ago

Hello everyone,
My name is Karen, I’m from USA,TX and I am here to give a brief story about a loan testimony I received from *LiverPool Aid Company* . I was looking for a legit loan lender few days back when I got the email from this company and they gave me a quick loan. Apply for a fast loan today email contact: ( liverpoolfinancialaid@hotmail.com ) .. Share this good news and get your loan today.Stay Blessed.

Recent News

TABS is tomorrow! 💃 💃

TABS is tomorrow! 💃 💃

On #TechpointDigest, we discuss Victory Farms’ $5m investment, Netflix for kids and people with disabilities, and TikTok’s plan to credit creators.

TikTok on a “Branded Mission”

TikTok on a “Branded Mission”

On #TechpointDigest, we discuss Autochek’s new acquisition, TikTok’s Branded Mission, Bamba’s $3.2 million seed, and Jumia’s report for Q1 2022.

[PODCAST] Tax evasion in Nigeria to get harder

[PODCAST] Tax evasion in Nigeria to get harder

Using data mining and machine learning, Nigeria’s Federal Inland Revenue Service plans to make it harder to evade taxes. Listen to today’s episode of #TechpointAfricaPodcast to learn how it plans to do that.

Subscribe to Techpoint Digest!

A daily 5-minute roundup of happenings in African and global tech, sent directly to your email inbox, between 5 a.m. and 7 a.m (WAT) every week day!

Please check your email to confirm your subscription.

Subscribe to Blockchain Explorer

Analysis oninnovation, regulations, and trends inthe blockchain sector, as it concerns Africa

Please check your email to confirm your subscription.

Subscribe to The Experts

A bi-weekly where tech career specialists take us on their journey from newbie to expert, and how they became successful in the industry.

Please check your email to confirm your subscription.

Subscribe to Founder's Table

A monthly series, where we catch up with founders in the startup ecosystem, learn about their failures, successes and a few tricks of the trade

Please check your email to confirm your subscription.

Copy link
Powered by Social Snap