While resources and opportunities abound in today’s digital world, that does not mean that starting up a business no longer requires the usual steps. If anything, the competition is even fiercer today in this highly globalized market, so raising funding can prove to be a challenge when there are hundreds of others fighting for the same spot. If you believe in your startup idea, though, you shouldn’t let it go. There are many ways to raise capital and if one doesn’t work out for you, you can try the next. Here are some to have in mind.
If you have some savings of your own, then the first option you have for funding your startup is bootstrapping. At the beginning of your career, you may struggle to convince other parties of investing in your idea. In those cases, bootstrapping makes things faster and simpler. Bootstrapping involves using your own funds, which can be both safe and risky in a sense. On the one hand, you’re not taking out massive loans with high-interest rates. You will be tied to your business, which is also a plus. On the other hand, your own money is on the line. This solution is the most suitable for ideas that don’t require a large starting capital.
Selling your assets
Other than using your own savings, there is also the option of selling some of your valued assets to gather the necessary funds for your project. This option may not be at everyone’s disposal. However, if you need funds fast, this is a viable short-term solution. You don’t have to sell the asset in question forever. Once your business is generating profits, you may be able to repurchase it.
Your personal network
After one’s assets, the next place one looks is one’s personal network. By this, we mean friends, family, and other acquaintances. Of course, you will have to determine if getting into business deals with those close to you is a good idea. For some people, it works out perfectly. For others, it may create friction. Nevertheless, it’s worth presenting your idea to those you deem suitable candidates if they manage to see the potential and actually show interest in investing in it. Note that you should always be transparent when making use of this plan and put everything to paper instead of just going for verbal agreements.
Grants and other programs
The next and one of the best funding options for an up-and-coming startup comes from your government. Governments, or other institutions, offer grants and other means of support to those with a promising business plan. This is a way for them to stimulate economic growth and the development of certain industries. Therefore, you will have a stronger chance if your idea falls into the supported categories. Nevertheless, grants are free to apply for, and their biggest advantage is that they don’t need to be paid back, which makes them worth a try.
The next place where it’s worth trying your luck is competitions. Obviously, huge, global competitions may be unattainable unless you have something really special and promising up your sleeve. But that does not mean that contests are entirely beyond reach. There are many local competitions where a modest but ambitious startup may have better chances at raising funds or at least attracting the attention of potential investors. Of course, participating in such an event is time-consuming, but the worst that can happen is that you go home empty-handed.
The next way to secure the funds you need for starting your business is to take out a bank loan. You may be wondering why this option was not the first one on this list, being rather straightforward. Well, the fact of the matter is that securing a bank loan for a startup business may not be as easy as it seems. Banks are quite careful when deciding who they will entrust with a loan, and sometimes, even a solid business plan may not be convincing enough. Still there are bank loans specifically for small businesses that may be attainable. Just make sure your credit score will not drag your attempt down.
Finding a co-founder
Another way of securing funds for your startup involves getting another person on board. If you don’t have the funds yourself, finding someone who does is quite a logical course of action, isn’t it? Looking for a co-founder is hardly a new idea. And for some, it’s a fantastic way to take a shortcut that eliminates bank loans and tedious competitions from the equation. Others, on the other hand, are not such huge fans of giving up part of the control to this other person. However, don’t jump to conclusions ahead of time. Not every partner is out to take the reins from your hands. That said, it’s important to be on the same page to avoid conflicts down the line. Finding the right partner may not be easy but the results can truly pay off.
Still, if you won’t want to give half of your title to someone, instead of a co-founder, you can consider looking for an angel investor. An angel investor is an individual (or even a group of individuals) who has some extra money and is looking to invest their personal funds in promising startups. In return, they take equity. At the early stages of a business’s growth, an angel investor may take a considerable percentage of your business, which can be disadvantageous for you later on, so stay smart.
As we mentioned earlier, bank loans don’t always work out for startup entrepreneurs. This is where private lenders come in. Private lenders typically work much faster than banks but are just as safe. For instance, entrepreneurs can secure commercial business loans in Australia in a matter of days and get their operations underway as soon as possible. In addition, repayment terms can be quite flexible which is another plus for a small business. Business loans from private lenders are clearly one of the simplest solutions on this list.
Quite similar to how angel investors work, there is also the option of looking into the services of venture capitalists. While angel investors are typically individuals, what you need to know about venture capitalists is that they are businesses that specialize in funding business ideas. Similar to angel investors, they also obtain a share of your business by investing in it but compared to angel investors, they are ready to invest considerably larger amounts of capital. In fact, they often have a minimum amount and a startup at its very beginning phases may not be what they are looking for.
Finally, a concept that has become quite popular lately is funding your business idea with the power of the public. Businesses that have ideas that can win over future customers can try their hand at crowdfunding said ideas. Crowdfunding has a number of benefits. For one, you get to garner attention and ensure that when your business actually launches, you will already have some sort of status—and ample interest. However, it also has some less than desirable features as well. For instance, the competition is fierce, and the funds that you may raise are limited. Maintaining such a campaign is also time-intensive, but you can consider that as a part of your pre-launch marketing.
There are many ways to raise funds for your startup, so don’t get hopeless if your bank says no. Partner up with someone, find investors for your idea or think about private lenders. There’s always a way.
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