How to fund your business in Sri Lanka is the biggest question any wanna-be entrepreneur has. I have so many friends who are dreaming about starting their startup but more than dreaming, they continuously nag about it!
They love complaining how miserable their lives and how mundane their work is. When one expresses how wretched his life is, there is always another to top that up with their story. Seems like no one’s life is going according to plan. And what appears to be their solution? Most of the time, it is to start their own business.
Here’s a typical conversation.
Random friend: I hate my job and life. I have to start a business of my own soon. Then I can live the way I want without answering to anyone else.
Me: So why don’t you start something?
Random Friend: Where’s money to start a business? I don’t have any funding.
Me: But do you have a business idea in the first place?
Random Friend: Mmmmm… No. But what about funding my business?
Idea first. Funding second
Most are worried about funds even before having a good business idea! After so many conversations like this, I have now figured out that “not having money” is just another excuse for them to abandon their dreams. Not having funds is not actually a problem but it’s the fear of starting something on their own. This is just another bullshit excuse to protect them from fear and failure.
Even though Sri Lanka is still baby stepping in the entrepreneur era, many Sri Lankans have started their businesses despite all adversity. You can do the same if you have a great idea.
If you have a great idea that you believe in, here are the best ways to fund your business in Sri Lanka. So for all the excusers out there, you cannot say you don’t have money anymore!
A big mistake first time entrepreneurs make is over estimate the funding situation. You think you need millions to start a business. The first thing you should do is figure out how much you need. This is paramount. Most of the time, you don’t need a huge investment.
Check out how much I spent to start Jump.lk.
Domain name (per annum) – Rs.3,300.00
Hosting (per annum) – Rs. 1,600.00
WordPress theme (Lifetime) – Rs. 7,200.00
Total cost – Rs. 12,100.00
If you’re planning to start the next Takas.lk, I understand that you need a bigger investment. But the point to take home is, it’s always important to know how much you need in the beginning. The rest, you can figure out on the go.
Bootstrapping is my favorite method of funding a business. Bootstrapping is when an entrepreneur funds her business with very little money, probably her personal finances. If you are getting paid a salary or if you have some savings in your bank, you can use that money to start your business. If you don’t have any savings, start saving from today. Cut down some of your pizza expenses.
The benefit of bootstrapping is; you can make your own decisions without the influence of others. It will be your business and your money. You are not responsible for any third party. So if you have some money saved in your bank, don’t be afraid to take some out and try on a new idea. If you fail in your first attempt, don’t get discouraged. Failure is a necessity evil.
Family and friends
If you have rich parents, consider yourself lucky. Borrow some money from your parents and work on your idea immediately. The difficult part is convincing your parents. Tell your parents how important it is to start your business. Use all the tricks in your pocket and get some money. You can use the good old art of crying! If that’s not gonna work, tell them that you will give out some shares in exchange for funding.
If you’re someone like me who wants to “stand on my feet” (read: stupid pride), try borrowing some money from your parents. Have a goal to repay them as soon as you make some money. When I wanted to import books for our cool online book shop I borrowed some money from my parents. Hopefully, I can sell all the books soon!
Friends are another great way to fund your business. If your parents are not rich enough, find a friend who is rich enough and is willing to throw some money at your venture. You can offer equity or make them your partner in the business. But when selecting your partners, be cautious to only select the ones who believe in the same vision. According to Lahiru Pathmalal, CEO of Takas.lk; partnering with people who share the same vision is one of the most critical factors in startup success.
Many Sri Lankans are aware of this option but no one seems to consider it enough. Did you know that banks provide personal loans to anybody who has a job? They don’t even question the reason for taking a loan. All you have to do is, go to a bank and tell them that you need a personal loan. They will ask for some documents and your income details. Once you deliver them, you will receive it within a short period.
Here’s the psychology behind loans. When it comes to “loans” people are so scared to start a business with a loan. Why is that? Most of us are drowning in credit card debts after buying so many unwanted crap that we will never use in the future but we’re afraid to get a loan to start a business!
Change your mind-set about loans. It’s just another debt. Nothing biggie. If you know how to manage your finances, paying off your debts is easy.
Startup scene is picking up in Sri Lanka and there are some great programs that offer funds for startups. Here’s a list of them.
Venture Engine is a Sri Lankan entrepreneurship program that happens annually. It’s a project by Blue Ocean Ventures and Indian Angel Network. Takas.lk and many other startups were funded through Venture engine. This is a focused program with direct access to potential investors. If you have a great business idea, you can apply for their program. If they like your idea, you’re going to get a lot more than funding. In fact you’ll get mentoring, workshops from leading investors and industry experts. If you want to check out their program, click here.
This is a startup incubator/ seed accelerator developed by Hemas PLC. They provide you funding and help you to commercialize your prototypes or products. If your idea is accepted, you get funding, mentoring, and access to resources of Hemas group as well. But there’s a small catch. They are only projects which have a strategic fit to Hemas businesses. So if you have a great idea, you can talk to Slingshot.
Idea2fund.lk is another platform for prospective Sri Lankan entrepreneurs to present their venture ideas, be challenged and receive constructive feedback, get linked with investors/funders and receive start-up consulting advisory on go-to-market strategy and execution from MTI.
This is an initiative of ICT Agency of Sri Lanka. It’s a startup incubation program where you can apply and get selected. If you get selected, you will go through a process and finally, they will offer you funding. Spiralation is more than just funding. They have so many programs for startups. You can learn more about them here.
This is another startup accelerator run by John Keells PLC. If you have a great idea or a product, you can apply to their open innovation challenge. If you are selected, you get funding up to Rs. 2 million and access to their resources. If you want to apply for John Keells X, click here.
This is another accelerator by 99x Technology. They can help you with means and resources to bring new ideas to market, and facilitate them throughout your journey by harnessing them with the necessary tools to accelerate startups from inspiration to exit. I don’t know if they provide funds but if you have a cool idea, you can definitely talk to them.
If you are in the apparel industry, this programs is ideal. They are happy to provide you with funding, mentoring, education and much more if you have a great idea that could help apparel industry. Check them out here.
Youth Business Sri Lanka is an organization which promotes young people to start their own businesses and transition from job takers to job makers. They are a part of Ceylon Chamber of Commerce. If you have a good idea, you can pitch it to them. They have a loan system for aspiring entrepreneurs. Also, they provide education on entrepreneurship. Check out their programs here.
Crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.
There are different variants in crowdfunding and one of them is equity-based crowdfunding.
Crowdisland is Sri Lanka’s first equity-based crowdfunding platform. If you have an idea or a product and if you’re looking for funds, you can definitely talk to them. Here’s everything you need to know about Crowdisland.
Angel Investors and Venture Capitalists
Angel investors invest in small startups or entrepreneurs. Often, angel investors are among an entrepreneur’s family and friends. The capital angel investors provide may be a one-time investment to help the business propel or an ongoing injection of money to support and carry the company through its difficult early stages.
A venture capitalist is an investor who either provides capital to startup ventures or supports small companies that wish to expand but does not have access to equities markets. Venture capitalists are willing to invest in such companies because they can earn a massive return on their investments if these companies are a success.
Check out below links for
Lankan Angel Network – This is a platform for angel and private investors who invest in high growth early stage Sri Lankan ventures.
Angel.co – This is a list of Sri Lankan angel investors.
BOV – This is a venture capital firm based in Sri Lanka and Singapore.
High Net-worth Individuals
Then you get the people who have lots and lots of money and are looking for worthwhile investments. If they like your idea, there is a chance that they would invest in your business. But how do you find them? Well, there is no hard and fast rule here. You can go to startup related meetups like SPIKE and other networking events. Eventually, you will get to know few individuals who are looking to fund startups.
That’s all for now. If you know any other ways of funding your business in Sri Lanka, add a comment and let me know. I would love to share it with our readers. Now enough reading. Go and start your business! Don’t forget to subscribe to our newsletter below if you need great tips about starting up, investing and good life.
Image Credit to Earl
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