Despite a global pandemic, travel startups managed to raise an impressive $1.4bn during the peak of Covid. Even in turbulent times, it’s entirely possible to get funding and move your travel company forward. But how do you raise money for your travel brand? We’ve got all the information you need about building finance for your travel brand with this guide.
Equity finance 💰
Equity finance means issuing more shares in your company, and it can be a handy alternative to getting a loan from the bank. The money won’t need to be repaid, with shareholders expecting a return on their investment instead, most likely through dividends.
Most businesses trying to raise equity finance follow a three-step route:
- You might seek a business angel ready to take a small stake and offer their expertise
- You may decide to move on to venture capitalists who can provide a larger sum of investment
- And if all goes to plan, a stock exchange or AIM listing can help you raise further equity.
Crowdfunding, consumer-facing 🙌
Crowdfunding platforms can be a savvy alternative to other forms of investing. They give owners of small and medium-sized businesses the chance to connect with the public directly and raise money for their brand.
Loan-based crowdfunding is also referred to as peer-to-peer lending, with Crowdcube, Seedrs and Crowdfunder some of the most popular sites in the UK. Just remember that investors will come from the public, and you’ll need to provide them with regular updates more so than you would with other forms of investment.
Government schemes 🗳️
The Government Scheme launched in 2012 encourages entrepreneurship, giving business owners the chance to fund their venture. If you’re just starting, using the scheme could help you get off on the right foot with a government-backed personal loan of between £500 and £25,000.
Interest rates are fixed at 6% per annum, with the loan typically repaid between one and five years. As part of the lending process, you’ll be required to submit a detailed business plan and cash-flow forecast while showing that your startup can afford the monthly repayments.
Borrowing using the company’s assets can be a smart way to raise funds for your travel brand. Specialist asset finance businesses operate for this very reason and can provide the necessary money to help you grow and move up to the next level in your business.
Asset finance tends to be easier to obtain than bank loans. However, like all forms of funding, there are risks involved. You could lose valuable assets required for running a business, plus the value of the asset secured against the loan can vary. That means the possibility of low valuations.
Family and friends 😎
Of course, there is always the option of turning to family and friends to help build your travel brand. However, approach with caution, as borrowing from those closest to you has its own risks involved and can lead to issues further down the line.
Detail a clear repayment plan, so there are no money problems further down the line. Your friends and family are the most supportive people. Therefore, you’ll want to keep that relationship strong by paying back the money and always being transparent with them.
Funding the right way
There’s no surefire way to get funding, but the good news is that you have options. With the right approach, you can raise money for your travel brand and start thinking about how to expand the business as travel picks up again and the customer mindset becomes more focused on travelling the world again.