How to raise money for ride-hailing
Growing a strong mobility startup requires investments. Customer development, choosing the right software, testing market hypotheses, launching the service, attracting new users — at all stages, there’s a need for sustainable financing.
So here are the best ways to raise the money your transportation startup needs to become a market leader. Read up and share your thoughts!
Seeking financial backup from banks is probably the most obvious choice there is. Providing a bank with a well-designed business plan allows you to get a loan quite quickly, and invest it in developing your business. While this is a good way to get your startup funded, many starters are afraid of relatively high collateral risks coming together with bank loans. Next to that, in many countries, the banking system is unreliable or not developed enough. If borrowing money from a bank is not your first choice, try one of the following methods to raise funds.
You probably have a clear vision of how to make the life of your community better. Your startup comes to make the exciting change. People out there are waiting for this change to happen. This makes crowdfunding a perfect way to finance your startup.
Pitch your business ideas on a crowdfunding platform that’s popular in your country. The community (including early adopters, just interested individuals, and professional investors) will make a decision to fund the initiative — or not. Fancy a good example? One of Onde’s clients, Pedal Me, operates in London, Great Britain. City dwellers turned out so tired of inefficient traffic causing lots of air pollution that they happily crowdfunded Pedal Me — a unique bike taxi.
A great thing about crowdfunding is that the process already generates a word of mouth about your business. In fact, this is PR at a very low price. Next to this, getting your business crowdfunded helps you to keep a significant amount of freedom you’d lose when getting your funds from institutional investors.
Note: the competition out there is tough. Make sure your startup idea is strong, perfectly planned and comprehensible. Tell people why your business is different from all other startups right away.
Angel and venture investments
Angel investors are entrepreneurs who’ve reached a certain level of success and commit to helping other aspiring entrepreneurs to nurture a strong business. Angel investors provide both funding and mentorship to promising startups. A huge advantage is that angel investors are often ready to invest even when the risks are rather high — provided that ROI prospects of your startup are impressive enough.
Venture fundings are very similar to angel investments. The major difference is that venture funds prefer to invest in startups with bright future prospects and pull out their investments as soon as they recover their investment and gain the expected profits. Just as angel investors, venture capitalists offer mentorship and business development recommendations.
Venture investors often prefer to finance bigger, more established businesses, as those show a higher level of stability and thus are more predictable when it comes to return on investment. Showing the required stability level is generally hard for startups.
Yet another very well-known reason for many startups to avoid attracting venture investments is a high level of dependability in decision making. As venture capitalists keep a keen eye on your business development, the chances are high that you have to follow their advice fully in order to maximize their profits.
Business incubators and accelerators
Business incubators and accelerators are a perfect way to raise funds for your very first enterprise. There is often at least one business incubator in every big city in the world — some of them governmentally supported, others run by experienced entrepreneurs.
It’s essential to understand the difference between incubators and accelerators, though. If you need a kick-start, an accelerator is a place to be. They specialize in quick set up and launch of promising startups.
Business incubators nurture businesses — along with funds, here you receive all kinds of mentorship, build long-term relations with other enterprises, and maybe even create some business partnership with other initiatives.
Whatever you choose, remember: working with startup accelerators and incubators requires complete commitment. You get up to 8 months to show what you’re worth — so make sure to show it all.
Participating in entrepreneurial contests is a great way to raise funds for your mobility startup. Taking part in such events goes like this: you find an attractive competition, showcase/pitch your startup’s business model, and behold! (If you win, of course, compared to other cases).
Contests require providing a detailed, impressive and realistic business plan — and a share of bravery to be compared with other daring hearts. Even if you’re not the winner this very time, try to get the most out of it: advice, expert judgment, inspirational examples of other participants, and of course business connections.
Governmental business support
Especially in developing countries with strong regulations, there are often opportunities for startups to get funding from officials and local councils. Grant and loan committees decide if your business plan is sustainable enough and if it fits the governmental priorities — if so, you can acquire startup funding on fairly mild conditions.
As it happens, governmental organizations can be slow and rather rigid — but if there’s no hurry and your business plan doesn’t require too much flexibility from authorities, it’s definitely worth a try.
As you see, there are many ways to raise funds for your startup idea. All you need is a business plan to be well-designed and impressive enough to show to potential investors. Oh yeah, one more tip to sum this all up: it’s a great idea to combine several funding sources or switch among them as you proceed to new stages of development. That way, crowdfunding and winning contests can help you gather an initial capital needed to launch while attracting venture capital and governmental financial support are perfect for later stages. Interchanging funding sources helps you to avoid decision-making dependency and provides new, valuable insights on business development. Try it!