Home Featured Banking How Businesses are Drumming Up Capital in 2018

How Businesses are Drumming Up Capital in 2018

Four experts weigh in on what works, and what doesn’t, for small businesses looking for cash


It’s no secret Edmonton has become a sleeper success in the world of tech. The city, once known for its proximity to Alberta’s oilsands, is now world renowned for many groundbreaking innovations that have led to the creation of some incredible businesses. But no matter the tech, these businesses all started out the same: a fantastic idea that needed some development and, most importantly, funding to get it started. 

Most technological advances in funding and financing come down to access. Not that long ago, paper mail and in-person interviews were the norms. Today, everything is at our fingertips and, in some cases, grants and loans can be applied for straight from a smartphone. “Finding funding has gotten easier because of technology,” says David Bayda, senior business advisor for Business Link. “You can apply for grants on your phone today.” 

That access is not just for applications, either. It means information on funding options are available wherever you are. James Keirstead, president of Levven and contributing member of the Edmonton Entrepreneurs’ Organization, recommends heading online to find the right programs. “Get on to the government sites and start looking,” he says. “Most funding is available to technology companies or exporters, but there is funding specifically to help women-owned businesses and help businesses become more efficient and competitive.” 

Traditional grants and loans are key to any growing business but technological advances, and how people use those advances, have opened up new ways to fund a business. Chief among these is crowdfunding: getting funding from a large group of people instead of one organization or investor. It also has the added benefit of extra exposure. “[Crowdfunding] is a method to establish customer demand for new products and ideas,” says Keirstead. “So it can validate your entrepreneurial idea.” 

While there are thousands of successful crowdsourcing examples out there, Edmonton is home to one in particular: Sugared & Spiced. The bakery started as a cookie stall in the Highlands farmers’ market before expanding to a Cake Club the following year. When owner Amy Nachtigall decided to grow, she used crowdfunding. Within two weeks, she had raised $32,000 and eventually surpassed her goal of $50,000. “They were able to take their customer base and leverage it into the next phase of their business,” says Bayda. “They had loyalty programs already in place so this actually helped their customers feel more connected.” 

Sugared & Spiced used ATB’s BoostR program to get started, a unique platform that combines crowdfunding with the resources of a bank. The program has helped hundreds of businesses across the province raise money and awareness all at the same time. It is just one way ATB is using technology to help businesses. Another is artificial intelligence. 

“We believe that making banking processes faster is critical for the province’s small businesses. As supportive as we are of businesses, even our processes are longer and more complex than entrepreneurs desire,” says Teresa Clouston, executive vice president of business and agriculture. “One thing that is really important to us is to speed up those processes with the help of artificial intelligence and automation. We intend to shorten the wait to hours, or even minutes.” 

Another innovation for ATB is their recent Amplify GIC, designed to help businesses make their cash work for them. Businesses can withdraw their cash at any time but the returns increase the longer it stays in. “We see a lot of businesses carrying significant cash balances month-to-month. Entrepreneurs know they’ll need that cash eventually,” says Clouston. “In the meantime, they should explore putting that money to work to improve their bottom lines.” 

Over at BDC, Canada’s only bank dedicated exclusively to entrepreneurs, programs are available to not only help companies use technology to raise money but to incorporate digital solutions into their businesses. “The challenge for many entrepreneurs is figuring out how to adopt digital solutions in their business to make sure they remain relevant, competitive and on solid ground now and in the future. That’s why we built a brand-new digital program for SMEs,” says Todd Tougas, vice president, financing and consulting. “With this program, we help entrepreneurs determine how they can leverage digital technologies, prioritize and maximize their investments and leverage their company’s data and insights, which is key in today’s world.”

BDC also offers programs exclusive to helping businesses grow the digital side of operations. “We see every day how businesses are accelerating their performance by harnessing digital technologies. However, getting external financing for software and integration costs is still difficult to obtain for many entrepreneurs in Alberta and across the country,” Tougas says. “We wanted to help. This is why we made available a new $250-million lending envelope in October to provide the money entrepreneurs need for projects that are key to their productivity and growth.”

It should be said, however, that no matter where you go for funding, whether it’s grants, banks or alternative revenue streams, it’s almost impossible to acquire money, no matter who you are, without investing yourself. “Banks are still looking for 25 per cent to 50 per cent of personal investment in any project,” Bayda says. “It is still critical to most funding sources that you demonstrate that you personally have skin in the game.”

Besides making sure you use your own personal resources in your business, both Keirstead and Bayda agree that turning a good idea into a solid plan is the first step to success. “One of the biggest pieces of advice I always give is to make sure you have a plan, not just an idea,” says Bayda. “I have people come into my office with really great ideas but they haven’t thought about their target markets, their revenue streams and all the things that go into making that solid business plan.”

Keirstead agrees. He points to many of the programs available to companies, from the Canada-Alberta Job Grant for training employees to CanExport and the Alberta Export Support Fund for exporting businesses. “All these programs require building out a good plan for how you will launch, scale and sustain your idea, which only makes [you] better,” he says.

Technology and access are changing how businesses find the capital to grow, expand or start out, and the sources of funding are making it easier for companies to find that money. It all comes down to having a great idea, a solid plan and the willingness to get creative in how you raise capital. If you are stuck, the best first step is to do what Keirstead did and start researching. “I think it has gotten easier for me since I spent time learning what was available and actively applying for several opportunities.”