Getting your startup business funded is no easy task. With so many entrepreneurs fighting for funding, the competition is even more fierce than ever. Investors and banks have to consider dozens of variables when it comes to handing over cash, and you may find yourself faced with some unexpected hurdles in the process. However, all hope isn’t lost. No matter what industry you’re in, there are plenty of ways you can get some much-needed cash to help you fulfill your entrepreneurial dreams. With that in mind, here are five ways to get funding for your startup business:
There are many startup competitions that you can benefit from. Many of these competitions offer cash prizes, which can be great for emerging businesses that are doing their best to avoid interest rates and hefty business loans (though typically, these prize money is used to complement other forms of funding). Some competitions—like Startup Battlefield—offer hefty prizes of up to $50,000.
But it’s not just about the money when it comes to pitching competitions and other types of startup competitions. Angel investors and venture capitalists are known to frequent competitions in the startup world and are always on the lookout for potential investment opportunities. This creates additional exposure for you. And if the event is covered by the media, you’re able to put your name out there and add a press clip to your mentions. With ample networking opportunities, you’ll be able to not only win money but meet new people who could prove fruitful to your future.
Incubators & Accelerators:
Incubators and accelerators are a great starting point for startups that are on the brink of growth and need someone in their corner to help propel them. These programs are designed to help entrepreneurs meet their goals, secure early funded needed to achieve milestones, and connect entrepreneurs with mentors and investment opportunities. Many of the business we know and love—from DropBox to Airbnb—have started at incubator programs. Not only do they provide you with capital when you need it most, but they also culminate in “Demo Days,” where you’ll pitch your product or service to a room full of willing investors and potential score a lucrative funding round.
Of course, if you’re looking for funding, business loans may have already crossed your mind. However, traditional business loans can be tough for startup founders. The majority of banks want you to have an established business before they dish out any funds, which is counterintuitive for a startup with plenty of potentials but no concrete cash flow. However, it’s not impossible. Many small business loans provide just enough cash to get you started, which can prove pivotal to your efforts to get off the ground.
There are also bank statement loans, which are ideal for entrepreneurs who are self-employed and don’t have the traditional W2s necessary for standard business loans. It’s important that you explore your options and see what works for you. You may consider talking to an account of the financial advisor to help steer you in the right direction as you navigate the tricky waters of bank loans.
An angel investor invests in new business ventures they feel confident will have a positive contribution to their investment portfolio. They take equity in exchange for funding. The biggest advantage of working with an angel investor is that it’s less risky than some other forms of debt financing, and also provides you with a valuable mentor who’s passionate about the industry you’re in—and believes in you and what you have to offer.
Finding the right angel investor is important, and you’ll need to take your time reaching out to people who you’re confident will be a great long-term asset to the business. Start by looking locally—angel investors appreciate having easy access to their investments and being local gives you an upper advantage. You can also participate in networking and startup investments for the opportunity to meet potential angel investors in person.
Talk to Friends & Family:
You’d be surprised by the amount of money your friends and family are willing to fork over when you’re passionate about your business. In some cases, this may be in the form of a loan, while others will take equity in your company. Some of your relatives might even offer you the money as a gift. Although these are your friends and family, it’s important that you take their investment seriously to refrain from burning bridges and causing strained relationships. Fortunately, your friends and family are more likely to be forgiving when it comes to the ups and downs to your business, but this doesn’t mean you should take advantage of the situation.
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