- December 31, 2021
- Posted by: BPlan Experts
- Categories: Funding, Startups
How do you raise money for your venture? The question is not only important for the next round of funding, but also for future success. It is critical to know what is needed for raising capital, and also to know what sources of startup funding are available to you. This post will cover what is needed and will provide you with the best 12 sources of startup funding.
Table of Contents
Bootstrapping is one of the most common sources of startup funding. The basic need of a business is liquid capital or seed capital. You should be prepared for this. Your primary asset is your potential and products. You are trying to create a market and raise money. Most companies do not get funded until they have already proven that they can do this. It is a great solution. You can raise cash from family or friends.
Crowdfunding is a system where people crowdfund to raise money for ventures. When it comes to crowdfunding, there are multiple avenues that you can reach out for funding. It is really simple. You can start a crowdfunding campaign for a simple app idea, and you may be able to raise a few thousand dollars. This is a fast method of getting funds and one of the essential sources of startup funding. However, your chances for raising a large number of funds are a lot less and are limited by your ability to create a viral campaign. To do that you will need more money.
Entrepreneurs can get funded by startup competitions. There are several competitions around the world, which give you the chance to be part of a prize pool and win cash prizes. Competition can take many forms, such as TechCrunch Disrupt. In this case, you are selected to participate in the ‘Cup of Competitions’, which is the grand finale. There are other competitions like Startup Sushi, which is a similar concept but allows female entrepreneurs. With an increasing number of competitions, this is becoming one of the popular sources of startup funding.
Incubators and Accelerators
If you are looking for funding, then you can reach out to Incubators & Accelerators. Incubators and accelerators are organizations that find promising startup teams, provide mentoring, and provide funding. They usually require you to participate in a “Bootcamp” and bring your own money. They are the least expensive option among the sources of startup funding.
Where do startups get money? In the last decade, governmental grants have become one of the most common sources of startup funding for the industry. Governments mostly use their financial muscle to attract and support the growth of startups. Governments have therefore realized that the growth and the growth potential of the startups are a great source of economic growth and employment generation for the country.
FDI or Foreign Direct Investment is also one of the good sources of startup funding. Sometimes, some of the countries also have their own startups. It is the aim of the government in the foreign country that the startups be launched in another country.
Angel investors are people with a strong entrepreneurial spirit and, after a period of intense self-discipline, are ready to lead an entrepreneurial project. Angels invest capital in early-stage startups with the hopes of a significant return on investment. Angel investors are not necessarily experts in your industry or target market, but have a strong working knowledge of your industry and can lend valuable feedback, experience, and knowledge to your company.
They are the most coveted investors for your startup, and you can look to them for funding. Angel investors can be anyone who has a significant amount of money or can provide other resources to your company.
What is a VC firm? In simple terms, a venture capital fund is formed to invest in the companies that are looking to be funded. Some VC firms are very big such as Kleiner Perkins, but even then, they invest in 30-35 companies a year. The fund will then help the chosen company understand the market, and choose which products they will invest in. The fund also helps the company by mentoring and communicating.
The fund might also help to finance the capital needed for setting up the company as well. They might help in finding the appropriate staffing and even giving the required finances to the company to set up the business. VCs offer investments from less than $50,000 up to millions of dollars.
Private Equity Firms
Private equity funds are relatively cheap compared to VC funds. Typically, private equity firms provide investors with a money-back business plan and then oversee everything that’s needed to get your startup to profitability. Private equity funds are well suited for startups and offer some of the best rates. The standard ranges from $50,000 to $500,000. These are great sources of funding for startups to grow into profitable ventures.
Business Credit Cards
Business Credit Cards are one of the easiest sources of startup funding. It is also one of the popular sources of startup funding. Most of the major businesses use this type of funding to help finance their companies. Business Credit Cards do not require a lot of paperwork and vetting process or verification of the company. When used the right way, Business Credit Cards can provide a fast path to your startup funding, without having to go through the lengthy due diligence process you will need for other sources of startup funding.
Savings Account is among the popular sources of startup funding. It is also one of the safe sources of startup funding. It is most frequently used for startup funding to cover a fixed period. It is mostly used for insurance plans, vehicles, education, and business purposes.
One of the key sources of startup funding is a business loan. This is what makes it an important and necessary source of funding for your startup. A business loan can really help your startup out when you cannot attract funds through traditional or traditional angel investor networks. Business loans can be big money, and they come with all sorts of risks. If you fail to pay the money back on time, you will be in trouble. There are some risks involved in getting a business loan, but if you are really looking for raising money, this source of funding can prove to be a strong way to pay for your startup.
Hopefully, these sources of startup funding will help you to get funded.
In conclusion, these are the best 12 sources of startup funding. However, do not take these sources as the only way to get funding for your startup. Use these sources as a general guideline and to get you started. There are a variety of means of acquiring startup funding. If a founder has a good understanding of the startup funding process, their chances of raising startup funding increase. The right funding can take a startup from a good idea to a great company. If you are stuck with your funding process, you can take help from a professional startup consultant.