Startup businesses have proliferated nowadays. Thanks to the emergence of the different innovations in technology.
A startup business idea is great. However, it needs some funding in order to execute and actualize it. There are many options of funding a startup business. But, the problem is the way how an entrepreneur approaches these options. Let’s examine some of these options.
The first and the most common option is bootstrapping. The easiest access for funding your own startup is of course your own savings. You must have enough savings to run your startup at least to be able to produce a proof of concept such as a functional website, a sample prototype product, or your first clients. This proof of concept will allow you to raise scale-up capital.
If your savings is not enough, the next immediate access of funds is money from your family and friends. Friends and family are usually flexible when it comes to servicing your loan much more than other external funding sources. They usually give friendlier terms and sometimes even without interest.
Borrow Money from The Bank or Lending Companies
Often times, if bootstrapping is not sufficient in funding startup business, the next funding option that’s usually in our minds is to borrow money from a bank or some lending companies, such as Zippa Loans
Borrowing money from the bank or lending companies requires more compliance requirements that includes financial statement evaluation, among others. For large loan amounts, a collateral is usually required for safety against possible default.
Seek Funds from Venture Capitalist and Angel Investors
The next source of funding comes from venture capitalists and angel investors. Both will scrutinize your business before they hand on their money but the difference is on the amount and level of management they are involved in your startup business.
Angel investors are usually private individuals. What makes angel investors unique is that they are not highly involved in the management of the company. While they may voice their opinions when it comes to long-term business strategies, the daily management of the company is not something that occupies high interest for them.
In contrast, venture capitalists are corporations that are highly involved in the management of the company. In return for the money they invested, they usually get an equity share of the company depending on the negotiation with the founders and the perceived valuation of the business.
Pitch Your Startup to Seed Funding Competitions
Various startup business vie for seed funding competitions across the Globe. These seed funding competitions promote, connect and invest in emerging market startups.
As a contestant, you are required to pitch a comprehensive and detailed business plan if you are looking to win over investor confidence.
Crowdfund Capital For Your Startup Business
Modern technology nowadays has made it easier for people to share their problems on an interactive social platform. Crowdfunding platforms are basically set up for individuals to pitch their business ideas to a community of investors or to individuals who are willing to support their ideas.
How it basically works is that an individual makes a business pitch on the crowdfunding platform, he shares his business model and it’s potential for future growth. If his idea is bought by the crowd funders on the platform, they’ll make a pledge to support his business model publicly and donate funds respectively.
Starting a business on your own is very difficult at the start. But with right strategy and business acumen, your startup may fly in the future. After all, great things start from small beginnings.