How to Fund Your Startup

In order to put your ideas to realization and get your own startup company off the ground, you need money. Where to find it? There’s no magic answer, and no people waiting in line ready to give you their money just because your business idea is so awesome. It happens that startups often get turned down for bank loans (funds can be tough to acquire even if your business established). Luckily, there are many alternative and creative funding options for launching a startup, so before you get completely discouraged, think everything through. Maybe some of them can work for you.

1. Crowdfunding

The best thing about crowdfunding is that you retain creative control over your business and reach your audience right away. In other funding models, investors get an equity of your business and partake in decision making when it comes to directing the business. With crowdfunding, you get to keep complete control. Also, you’ll have the chance to get honest thoughts about your product from your audience and start building a community right away.

Crowdfunding works like this – you sign up to a crowdfunding website, such as Kickstarter or Indiegogo, present your business idea and business plan, as well as the amount of money you need to launch it. The audience gives you money if they like your project, while you spread the word about your crowdfunding campaign to raise awareness. When you manage to collect enough money – you’re ready to go. Just be aware of that it may not work (nobody can guarantee that you’ll raise the money for certain) and that the story you’ll present has to be a great one.

2. Angel investors

Angel investors have helped many companies that have grown to be leaders in their industry, such as Google. How to get an angel investor to invest in your startup company? You’ll have to give them a 20-25% return on their investment. An angel investor can provide you with tactical benefit also, as you’re likely to get one who has strategic experience and business connections. On the other hand, they do want to see their return on investment, so they’ll have some of their own interests at hand when they take part ownership in your company.

3. Venture capital

A group of professional investors who are on the look for the highest potential entrepreneurs and most profitable ideas is called a venture capital firm. It’s what the most people think of when they think about startup funding options. Venture capitalists aim to return their investments and make large gains. The best thing about this funding option is scalability, and it’s the best option if you want to get a great number of connections and large amount of funding in exchange for some control over your company. If your idea has a potential for a large ROI and a very large scale, venture capitalists will be interested. On the other hand, you’ll lose some equity and control over your company.

4. Online lending

On the other hand, if your startup is small and doesn’t require a large amount of funds, then online lending is the best option for smaller loans. The advantage of lenders like ALC Commercial is their speed, because it takes only about an hour to complete an application, while the approval and accompanying funds can be granted within a few days. Some of them are interested in investing in startups and small businesses themselves, or have specific loan offers for those who are in a minority class or are underserved.

5. Fund it yourself

A great number of startups today are self-funded or bootstrapped. According to Smallbiztrends, more than 82% of startup funds comes from the owner or their friends and family, while 77% of startups rely on self-funding for their initial funds. It will probably take some time to save enough money before you launch it and grow organically. On the other hand, your business remains yours alone as you don’t have to give up any control or equity.

6. Turn to family and friends

Ideally, your closest ones should be interested in helping you with your business plans. If they have enough funds and trust you, they’d want to help. In reality, they just may not believe in you as much as you do in yourself. When it comes to non-personal funding for baby-startups, this is the primary source of money.

The best thing about it is that you don’t have to go through any paperwork as you’d have to if getting a formal loan. Have in mind that it might put the relationships at risk, in case the startup fails. Money can often get in way between people, so there’s much to lose emotionally.

In addition to this, you can always reach out to prospects that might be interested in becoming partners and even invest in your startup.

The kind of startup funding that will work the best for you depends on the nature of your business ideas and plans. If your startup has a potential to grow large in scale and make big money, contact venture capitalists, but if all you need to run your business is an office, a website, an eCommerce site, and a place to store your merchandise, then you’ll push it through with a small business loan.