One of the most challenging aspects of running a startup is the process of finding and securing adequate funding to grow your business. Is there any secret formula for finding the funding for your startup business?
It can be an arduous and complicated process, with analysis paralysis kicking in for many teams around the world, whether it be from venture capitalists or angel investors.
Here Are Five Simple Tips To Help You Getting Funding For Your Startup:
In this guide, we are putting together a list of useful and relevant tips you can follow to secure funding and take your business to greater heights. When you are a startup business entrepreneur, the first thing you must know is how to get funding for your startup business. But apart from this, there are many more things that you must know when you are thinking of starting your business.
1. Government Funding
Governments around the world are increasingly creating various types of budgets and funds to promote the growth of startups in their countries. This will go to help you attract new talent and revenue along with boosting overall GDPs in their respective nations.
Funding With Fixed Tax Breaks
Many countries have set up funding for your startup with avenues such as tax breaks for research and development. Which is (R&D) along with various types of grants, innovations, and patents which are developed by professionals. Tax relief and credits are also granted for creatives in the media industry looking to create content such as video games, film, and television shows.
- Along with funding, packages may also include networking and mentoring sessions with professionals from the government and corporations.
- Companies can tap into the decades of developmental experience that industry professionals have and use it to further scale their business.
- Obtaining government funding can often also open the door to other modes of funding, such as from Venture Capitalists (VCs) and angel investors, who will be more likely to invest in companies that have government backing or sponsorship.
The rise of platforms such as Kickstarter and Crowdcube has made crowdfunding a business easier and more accessible than ever.
With this mode of funding, your company is not beholden to any external investor or firm but to your customers directly. This freedom brings with it a significant amount of trust and responsibility as well.
Perfect Solution For Any Small Scale Projects
If you want to know how to get funding for your startup. Crowdfunding will go to be a perfect solution, especially for small-scale projects.
However, it can often be extremely difficult to gain enough funds to support and scale a business 100%. Some of the most successful projects of Kickstarter can manage to raise about
$30,000 — a sum that is not non-significant but one that might not be sufficient to support the daily operations of a company.
Still, this method of securing funding is not without its merits. Crowdfunding can best be utilized for smaller-scale projects or for companies looking to get funds to produce a proof-of-concept product to pitch to investors.
3. Family & Friends
For startups looking to “bootstrap” their business, it might be difficult to even get a meeting with a VC or an angel investor if you do not already possess some connections in the industry or have a proven track record of running a business.
Get The Money From The Personal Circle
In the event of inexperience, you may wish to consider getting funding for your startup from your immediate circle of family and friends, who will be willing to consider more options than external investors might not, such as flexible repayments or simply opting for future stocks as payment instead if your company takes off.
However tempting this form of funding might be for a beginning entrepreneur, be warned that it is not without its risks.
Personal relationships may become strained and sour if things go south, and a lack of backup funding options might make things worse.
4. Credits & Loans
Taking on a loan might be associated with negative connotations in popular culture, but it is a great way to secure initial investment capital for your startup, also protecting the equity of your business that might be taken up by VCs and angel investors.
There are various types of credit lines and loans available on the market for a young startup to consider. They can come with varying sets of criteria and packages, such as differing sums, repayment periods, and interest rates, among others.
Find The Banks Which Are Offering Loans To Early Stage Startups
Some governments around the world also offer loans to early-stage startups looking to get their feet wet in the world of entrepreneurship, especially if they are a company relevant to the government’s interests, such as in the field of science and technology.
Another form of funding for your startup is also available is peer-to-peer (P2P) lending systems, whereby online lending platforms such as Crowdstacker and Funding Circle can provide funding for your business.
5. Equity Funding
One of the most conventional methods of securing funding, equity funding is the milestone for many young startups looking to get their first big boost of capital to begin scaling their business.
The two main modes of gaining equity funding are via angel investors or VCs, who can use their personal or institutional capital to invest in startups at any stage of their growth.
Find The Investors
Angel investors are typically individuals with a high net worth and use their wealth to make investments in companies. Many angel investors operate on a high-risk, high-reward philosophy. And they are willing to make risky investments that a VC firm might not be readily willing to find the funding for your startup.
Gaining access to angel investors might be difficult without personal connections in the industry. As such, it is recommended to make your company more visible to angel investors through networking and professional events to make your startup visible and appealing to them.
VC Can Also Be A Good Source Of Funding
Aside from angels, VCs are another source of funding for your startup that many businesses are keen to secure deals from.
VCs can pool together capital from high net-worth individuals as well as financial institutions and can offer more funding to individual companies during the seed or later stage rounds.
Startups looking to secure deals with VCs should do thorough research to determine if the particular VC is a suitable fit with the values and business models of your company.
And be prepared to pitch to a large amount of VCs before finding one that suits your business perfectly.
With the help of this guide, we hope you find yourself one step closer to taking that important leap of faith and securing the much-needed funding for your startup company.
There are various forms of funding available from varying institutions such as the government, online lenders, and angel investors or VC firms.
These institutions and individuals who invest in your company might also take up some equity, so be sure to keep that in mind if your company seeks to protect its equity as much as possible.
- Funding Your Startup with Cryptocurrency
- Tips for Funding Your New Business Startup
- 5 Tips To Help You Properly Scale Your Business While Growing