Financing your business

How to fund your business

Starting or growing your business often needs an injection of capital – but if you can’t raise it yourself, you’ll need to explore other sources. This article looks at the options for funding your business and how to increase your chances of success.

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In this article

Review your goals and finances

It’s not as simple as plucking a figure out of thin air. Make sure you do your homework so you have an accurate picture of your financial situation. 

Start by working out how much you need to achieve your business goals. Once you know how much you need, consider whether you can raise it yourself before you look at external sources of capital.  

For example:

  • Do you have any savings (either business or personal) that you could use? 
  • If you have unused assets in the business, such as machinery that’s not used very often, buildings or excess stock you could shift. Weigh up the advantages of selling these first.

If raising the money yourself is not feasible, you’ll need to consider external options.

Debt capital

Debt capital is simply borrowing money to finance your business growth. It’s the most common way for businesses to raise cash. It usually requires you to pay interest on the loan or debt.

These are the most popular sources of debt capital.

Friends and family

You might be tempted to approach your nearest and dearest as a first option –  but take care. Owing money to people you know isn’t always a good idea as it can affect relationships, particularly if something goes wrong.

The bank

Your bank may be able to assist with anything from short-term funding like an overdraft (e.g. for buying extra stock) to longer-term loans for new equipment or buildings. 

Interest rates for loans with a property as security are almost always cheaper than unsecured finance (where loans aren’t secured against a property or other assets). So consider whether you have any spare equity in your house that you could use. 

You might also consider asset finance, where you borrow cash over the value of an asset, work in progress or stock. If you need a particularly expensive piece of equipment, asset finance may be a better option than leasing.

Before you approach your bank, check out our article about applying for a business loan for some useful tips.

Equity capital

If you need larger amounts of money, you could consider equity capital. This is where you raise cash in exchange for selling part of your business. In effect, you give up some of your ownership (equity) in your business for capital to fund its growth. You usually need a lot of capital to make it worthwhile to the investor.

Giving up some ownership (and control) can be a hard decision, so you need to think about how comfortable you are with the idea. However, it may be necessary for the business to grow. You may prefer to own 40% of a business worth $2,000,000 than 100% of a business worth $150,000.

These are the main providers of equity capital.

Angel investors

Angels are people (often other business owners) who think your business is promising and are willing to invest in it. One advantage of angel investors is that they’re usually keen to invest at an early stage, which can help with your start up. Another is that they often have a lot of knowledge, experience, and connections you can take advantage of.

For an overview of angels and what they can provide, visit the Angel Association of New Zealand’s website.

Venture capitalists

These are investment companies or fund managers who provide cash in return for part-ownership of your business. 

Venture capitalists differ from angel investors because they’re typically looking to invest larger sums of money (which could be a lot more than what you need) and their requirements are much tougher. They may play a less active role in the management of your business, but it’s common for them to seek a role on your board instead, which is why they tend to look at larger businesses.

For more information on the venture capital environment visit the NZ Private Capital website. You can also enquire through business networks such as the Employers and Manufacturers Association or the New Zealand Chamber of Commerce.

Other sources of raising capital

Government grants

It’s worth checking if your business qualifies for government funding. Mostly, this type of funding comes in the forms of grants. You can find out more information on the website.

Corporate investors

Sometimes large companies invest in smaller ones that they have a vested interest in seeing grow and expand. Large customers or suppliers may be worth exploring, as they have a stake in your success.


Online capital raising forums such as Kickstarter, GoFundMe, Snowball Effect or Pledge Me are increasingly popular. They profile businesses seeking capital and then rely on the online investor network to raise the capital required. 

Crowdfunding can be a great way to get customer buy-in from the get-go, but this method requires a lot of prep work before launch, with no guarantee your project or business idea will be successful. Make sure you do your homework and give yourself plenty of time. It’s not uncommon to spend 6 to 12 months preparing a crowdfunding campaign.

Crowdfunding platforms are licensed by the Financial Markets Authority (FMA) – check out their website for more information.

Preparing your business for raising capital

Regardless of where you get the capital from, the more prepared you are the better. These tips will help you present a strong business case to whoever you’re talking to.

Consult with your network

An ANZ Business Specialist, lawyer and accountant are all people you should consult about finding investors. They’ll have good contacts and can help. It’s also useful to talk to other business owners who have successfully raised capital.

Build your business case

Investors want to know why they should invest in your business. So you need to give them a compelling reason. Review your business plan and have it checked by a trusted adviser. Make sure it’s presented well – you’ll need this plan for investors to understand your business. 

Imagine you’re a prospective investor. Would your business plan convince you to invest in your business?

Get your financials sorted

Present your actual and projected cash flow and profits. Make sure you outline your assumptions when it comes to your forecasts. You can use our cash flow forecast calculator to help.

Get your business ready

Investors want to see that your processes and systems are running smoothly, you’re monitoring your KPIs, and providing an excellent customer experience, among other things.

Show you’re special

Highlight your point of difference from your competitors and what makes you stand out from the competition.

Demonstrate how you’ve protected your intellectual property. If you can show your business is scalable (for bigger markets), or well-suited to changing or new markets, so much the better.

Sell your team

Show that they’re experienced, skilled, and ready for the journey. Be upfront about what gaps need filling. The investor may be able to help you fill them.

Research potential investors

Don’t grab at the first person to offer money. Make sure you’ve done your due diligence on all potential investors so you can decide which will work best with you and your business.

Put yourself in the shoes of potential investors

Think about what questions they will want answered and what they will be looking for. For example:

  • The product/market fit – what problem is this solving, how big is the market and how much will people be willing to pay for it?
  • You – they’ll want to be sure you have the passion and determination to succeed, and you have the right team behind you.
  • Validation and risk mitigation – e.g. how many customers you have and what are your sales.
  • Competitive environment – who are your competitors? How will you protect your intellectual property and business model?

If you're not successful

If you don’t succeed in convincing investors to back you, it doesn’t necessarily mean your business idea is a bad one. There could be many reasons why people choose not to invest, from timing to other opportunities or simply differing perceptions of risk or market potential.

If you get a rejection, ask why – it could give you valuable insights that can help you improve your product, or tailor your pitch to better appeal to potential investors. 

For investors who are on the fence, keeping them in touch with periodic updates on your progress may help get them over the line.

Contact an ANZ Business Specialist

Our specialists understand your kind of business and the challenges you face as a business owner. We can help you figure out how to make your business grow and succeed.

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Important information

We’ve provided this material as a complimentary service. It is prepared based on information and sources ANZ believes to be reliable. ANZ cannot warrant its accuracy, completeness or suitability for your intended use. The content is information only, is subject to change, and isn’t a substitute for commercial judgement or professional advice, which you should seek before relying on it. To the extent the law allows, ANZ doesn’t accept any responsibility or liability for any direct or indirect loss or damage arising from any act or omissions by any person relying on this material.

Please talk to us if you need financial advice about a product or service. See our financial advice provider disclosure at

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