How to Raise Money from Investors & Crowdfunding to Expand Globally from the UK

International business expansion has become an increasingly realistic prospect for small businesses and startups across the UK in the last few decades, thanks to digital platforms and increasing globalisation. While the prospect of expanding internationally brings exciting benefits, such as accessing new markets, a broader customer base, a diverse talent pool, and increased revenue, it is undeniably a monumental undertaking.

Securing the necessary funds is a critical step in this journey, covering the various costs associated with entering new markets. These could vary from market research, legal fees, marketing and advertising, hiring local or remote staff, setting up operations in a different country, and more. In this guide, we'll explore two key methods for securing funds when expanding internationally - investors and crowdfunding - and discuss the benefits, considerations, and potential risks associated with each approach.

Did you know that with your Wise Business account you can set up local account details in 9+ currencies including EUR, GBP, USD or CAD without needing to open a business account in the local country?

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Securing funding from Investors

One way to secure funding for international expansion is through traditional investors such as venture capitalists or angel investors. These individuals or institutions provide capital in exchange for equity or ownership in the company. While this may seem like an attractive option due to potential high amounts of investment, it also means giving up a portion of ownership and decision-making power in the business.

Venture capitalist is an investor or firm that provides financial support to startup companies and small businesses in exchange for equity ownership.

Angel investor is an individual who provides capital and support to early-stage startups in exchange for equity or convertible debt.

5 steps to secure funding from an investor

1. Define Your Funding Needs: Determine how much funding you require for expansion into new markets. This should be based on thorough research and realistic projections for growth.

2. Prepare Financial Documents: Both investors and crowdfunding platforms will want to see detailed financial documents such as income statements, balance sheets, cash flow statements, tax returns, etc.

3. Craft a compelling pitch: Pitching to investors is an art. Your presentations should not only outline your expansion plans but also articulate the unique value proposition for your business. Provide a comprehensive analysis of the current market landscape and how it aligns with your expansion goals. Outline specific regions for expansion and justify your choices, while providing detail of new offerings or enhancements that will contribute to your expansion. Provide detailed financial projections for the expansion period, in the currency of your new market.

4. Find the right investors: Finding the right investors for your business is crucial and goes beyond financial backing. Seek individuals or companies that bring expertise, networks, and a shared vision for your international expansion.

   For finding angel investors consider exploring online platforms like Wellfound, Angel Investment Network or BGF that connect entrepreneurs with potential investors.

   Networking events, industry conferences, and local business forums are valuable for meeting potential backers, especially venture capitalists. Consider looking for these on Eventbrite. IndustryVentures or Sequoia are also a great way of possibly finding venture capitalists.

5. Build a strong relationship: Establish a connection with potential investors and develop a strong rapport to enhance trust and increase the likelihood of securing funding.

How to receive money from investors

• If you're expanding abroad, you may be raising funds in other currencies or from investors based in other countries. Wise can help streamline this process with account details in 9+ currencies, eliminating the need to set up an account in the country you're expanding to.

• This also makes it easier and more affordable for investors to pay you in their currency of choice, and can also give your plans for overseas expansion a boost.

• For example, if your investors are based in the US and are paying you in USD, you could set up account details in USD from your Wise Business account, and then spend directly from your USD balance or convert it at the mid-market rate into the currency you need for your international expansion strategy.

Here are some advantages and disadvantages to consider before securing an investor: Pros: Expertise and guidance: Investors bring more than just money to the table; they also offer valuable expertise and guidance based on their experience in the industry. Network: Connecting with an investor opens doors to a vast network of potential partners, customers, and suppliers. Long-term partnership: Unlike loans, investments do not need to be repaid immediately, creating a long-term partnership between the business and the investor. Reputation boost: Having reputable investors on board can enhance the company's credibility and attract more potential investors.

Cons: Loss of control: When accepting investments, business owners must give up some control over decision-making processes. Dilution of ownership: In exchange for funding, investors receive equity in the company which reduces the owner's share of ownership.

Crowdfunding

Another popular option for raising funds is through crowdfunding. Crowdfunding is a method where a large number of people contribute small amounts of money towards a project or business idea. This not only provides necessary capital but also creates a network of supporters who are invested in the success of the business. While numerous platforms exist, three stand out for international expansion:

• Kickstarter: Ideal for creative projects and product launches.
• Indiegogo: Known for its flexible funding options, Indiegogo accommodates a wide range of business types
• Crowdcube: A popular equity crowdfunding platform that connects businesses with investors looking for equity stakes.

3 steps for your successful crowdfunding campaign:

1. Define Your Campaign Goals and Strategy:

• Clarify Objectives: Clearly define the purpose of your crowdfunding campaign. Whether it's international expansion, launching a new product in a new market, funding an international creative project, or supporting a cause in a different country, having a specific goal is crucial.
• Set a Funding Target: Determine the amount of money you need to achieve your objectives. Be realistic and transparent about how the funds will be used and make contingency for unexpected costs and delays.
• Identify Your Target Audience: Understand who your potential backers are and tailor your campaign to resonate with their interests and preferences.
• Craft a Compelling Story: Develop a compelling narrative that explains why your plans for international expansion matter to the company's growth and how backers can contribute to and benefit from its success. Use visuals, such as images and videos, to enhance your story.

2. Choose the Right Crowdfunding Platform:

• Research Platforms: Explore different crowdfunding platforms (e.g., Kickstarter, Indiegogo, GoFundMe) and choose the one that aligns with your project type and funding goals.
• Understand Fees and Terms: Familiarise yourself with the fees and terms of the chosen platform. Consider both the platform fee and payment processing fees to ensure they align with your budget.
• Review Successful Campaigns: Analyse successful campaigns on the chosen platform to understand what elements contribute to their success. Learn from their strategies and incorporate relevant insights into your campaign.

3. Create a Compelling Campaign Page:

• Design an Eye-Catching Campaign Page: Craft a visually appealing campaign page that clearly communicates your story, goals, and rewards for backers. Use high-quality images and videos to enhance the presentation.
• Outline Rewards Tiers: Define enticing reward tiers for backers at different contribution levels. Make the rewards relevant to your project and offer unique incentives to encourage higher contributions.
• Establish a Realistic Timeline: Set a realistic campaign duration, typically ranging from 30 to 60 days. Clearly communicate key milestones and the timeline for delivering rewards.
• Promote Your Campaign: Develop a pre-launch marketing strategy to build anticipation before your campaign goes live. Leverage social media, email newsletters, and any existing networks to create awareness of your plans to raise funds to fuel international expansion.
• Engage with Backers: Actively engage with backers during the campaign by responding to comments, providing updates, and expressing gratitude for their support.

Here are some advantages and disadvantages to consider before securing crowdfunding: Pros of Crowdfunding: Access to Capital: Crowdfunding provides a platform to raise funds from a large number of backers, potentially providing significant capital for your business to expand overseas. Market Validation: A successful crowdfunding campaign can serve as a validation of your product or idea, indicating there is demand in the market which could translate into a successful overseas expansion strategy.. Community Engagement: Crowdfunding fosters a community around your brand, creating a network of backers who are emotionally invested in your success. Diverse Funding Sources: Crowdfunding allows you to tap into a diverse range of backers, including friends, family, and individuals interested in supporting your plans to grow your businesses internationally. Early Product Exposure: Launching a campaign can generate early visibility for your product, attracting attention from potential customers and investors.

Cons of Crowdfunding: Time-Consuming Campaign Management: Running a crowdfunding campaign requires significant time and effort for preparation, ongoing management, and fulfilment of rewards. Risk of Failure: There is no guarantee of success, and if the campaign does not reach its funding goal, you may not receive any funds, and the effort put into the campaign might be in vain. This may hold back your plans to expand internationally. Platform Fees: Most crowdfunding platforms charge fees for hosting campaigns, and additional payment processing fees may apply, reducing the overall amount received. Intense Competition: The popularity of crowdfunding means that there is a high level of competition for backers' attention, making it challenging to stand out among other campaigns. Pressure for Results: Successfully funded campaigns often face increased expectations from backers, creating pressure to deliver on promises and meet deadlines. Intellectual Property Concerns: Sharing detailed information about your plans exposes it to potential intellectual property risks, as there is a risk of idea theft or replication.

Navigating the complexities of international expansion requires careful consideration of funding options. Investors offer substantial capital, expertise, and networks, albeit with the expectation that you will relinquish and measure of control, and dilute ownership.

Crowdfunding platforms provide access to diverse funding sources, market validation, and community engagement, but entail challenges such as time-consuming management, the risk of failure, and associated fees which can reduce the funds available to expand your business abroad.

For all your international payment needs, Wise provides a multi-currency business account with fast, affordable and efficient international payments, local account details, no monthly subscriptions and more. Check out the table below to learn more about the Wise Business account!

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• No monthly subscription international business account
• Multi-currency support: hold 40+ currencies, send payments to 160+ countries, and get local account details for 9+ currencies including GBP, EUR, USD, AUD.
• Low-cost currency exchange: mid-market exchange rate with transparent fees
• Batch payments: pay up to 1,000 recipients at a time in multiple currencies with one spreadsheet
• Multi-user access: manage user permissions and choose from 5 roles to manage what your team members can view, access, and manage
• Business debit expense cards for you and your team: up to three digital cards per team member, and set spending limits according to your business needs
• Accounting integration: connect with Xero, QuickBooks, FreeAgent and more.