Are you ready to kickstart a business? New-age entrepreneurs have impeccable ideas and drive to invent something new. They have an eye for talent and know their way around vendors; however, funding always becomes a sticking point. How to raise money when starting a business?
Despite your startup’s size, you will need a hefty amount of capital to run the operations. From investing in fixed assets, renting office space, to marketing – you will need funds at every step of your entrepreneurial journey. Many emerging entrepreneurs reach out to friends and family to get interest-free loans, whereas others opt for bank loans. While both are viable options, you must think out of the box.
Perhaps, reach out to a FinTech company offering small business loans at low-interest rates. Likewise, you can try your luck with crowdfunding or angel investment. So let us show you the ropes if you are new to this field. Here we have highlighted six funding ideas for your startup.
- Raise Money through Loans
When we talk about loans, the idea of bank loans hits the mind. Unfortunately, most banks have stringent requirements, making it arduous for a startup to qualify for a loan. Besides financial projections, they ask for collateral – security to recover the loan if your company goes bankrupt. Therefore, explore your options. Maybe, you can seek loans from FinTech or credit unions.
They offer money with minimum requirements and fast approval rates. In addition, they have different types of loans. For example, you can apply for an emergency loan if your startup needs money to finance working capital. You can do a specific search with a company name such as nectar emergency loans NZ if you reside in New Zealand. It will help you find relevant lenders offering customer-centric loans.
- Get Crowdfunding
From Popsocket to Brooklinen, these startups have become multi-millionaire giants through crowdfunding. To everyone’s surprise, crowdfunding has excellent potential in today’s digital economy. So, why not try your luck and launch a crowdfunding campaign? It doesn’t mean you have to be tech-savvy. All you have to do is craft a compelling pitch, referencing your startup’s growth potential. After this, you can start your campaign on leading crowdfunding forums like Kickstarter.
Your campaign will talk about how your startup will fix the problems customers face today. In addition, highlight your contributions to the community, such as biodegradable packaging. These initiatives attract people, helping you get funds for the business. If everything goes to plan, you will acquire the capital you don’t have to pay back. Besides this, the public will develop an interest in your company even before its debut, creating brand awareness.
- Look for Angel Investors
Today, high net-worth individuals – angel investors are investing in startups. Thus, try targeting these individuals with a track record of supporting startups. There are a lot of angel investment networks where you can pitch your idea. If an investor likes it, they will reach out. The only way to convince an angel investor is by demonstrating how your startup is worthy of its investment.
Moreover, look for relevant angels. For example, someone who has been investing in restaurants might not be willing to invest in your tech startup. Finding the right investor will help you benefit from their financial support and wisdom. After all, angel investors are experts in their fields. Their mentorship and advice will help you run the business smoothly.
- Enroll in Business Incubators
The goal of incubation centers is to support business development. They support new businesses that include office space, mentorship, and financing. They also allow startups to share technical and logistical resources in their initial years. Once the company reaches the breakeven stage, it becomes ready to roll out in the market.
Startups that receive this kind of support operate within state-of-art sectors such as information technology or multimedia. A business incubation center can unfold different avenues if you work in a similar industry. Further, a lot of incubation centers also introduce investors to emerging startups. So, if an investor likes your business model, they will directly fund your startup while providing technical support.
- Seek Venture Capital
A venture capitalist believes in your ability to turn a business idea into a profitable company. As a result, they are willing to invest in your startup. And in exchange, they will seek a small percentage of ownership in the business.
To attract venture capitalists, you have to fine-tune your business model. Prepare a comprehensive business plan covering financial outlook, business model, marketing plans, and sales forecasts. All in all, your business idea should be ready to scale.
However, one drawback is that venture capitalists are looking for the next big thing. Hence, many entrepreneurs are unable to convey the scalability of their business. In addition, they offer investment for a short tenure, meaning you have to repay them as soon as possible.
One of the most common ways to get your startup up and running is through bootstrapping. It means using your funds to start a company. Investing all your savings into a business might seem risky, but it can help in the long run. First, you don’t have to pay interest since you are pooling in your savings instead of taking debt. It will allow you to scale down expenses. Second, you don’t have to share ownership of the business since no third party is involved.
Before you dig into your savings, ensure they are enough to start a company. Get a free credit report card to determine where you stand financially. Using savings might not be a great idea if you already have taken personal loans on credit on your assets. Hence, make sure you can afford to use your savings without any financial setbacks.
As entrepreneurs have several funding options, picking one can be tricky. You have to opt for one that aligns with your business needs. After all, what might be suitable for your friend’s startup may not work for you. Therefore, explore your options and work out the costs to determine the most viable option. If acquiring a loan seems feasible, submit your application. Similarly, connect with your network if there are any angel investors or venture capitalists.