Even the biggest corporation today began with an excellent business concept. So, if you’re thinking about starting your own business, you should take a leap of faith and go with it. However, are things that simple in the real world? No, funding and growing your startup isn’t all roses and daisies, regardless of how revolutionary your idea may be. To take your fledging kick-starter to a full-scale enterprise, you need capital to bring your vision from concept to ideation.
However, obtaining the requisite funds, you require for your fledging enterprise isn’t easy, particularly when you don’t have a product or service to bring to the table. Consumers will be skeptical about your brand and won’t believe what you’re selling. And the worst part is that you can’t secure your enterprise funding from someone who doesn’t believe in your idea. Generally, a startup needs to undergo several phases of funding to survive the early stages. This read aims at looking at how startups get funding to facilitate operations.
Crowdfunding
Crowdfunding entails amassing money through several funders, usually through well-known crowdfunding sites. Crowdfunding is an excellent platform to use as it provides entrepreneurs will have the chance to accrue the necessary cash for their enterprise. They can assist a business spread awareness about its products and services. You only need to create a profile stipulating more about your business and the amount of cash you’re looking to raise.
People who believe in your cause can then make donations to your campaign, usually in return for some form of reward (a discount contingent on the amount donated, one of your products, or some other incentive). Another reward can be a profit share or equity in your business. For the crowdfunding strategy to succeed, ensure that your company, service, or product has a compelling story.
Crowdfunding sites vary and charge some levy to catalog your campaign, either a percentage of the raised funds or a processing fee. Popular websites to consider are Kickstarter, Crowdfunder, Crowd Supply, Indiegogo, GoFundMe, and Crowdcube, to name a few.
Angel Investors
These private investors put money into the business during the seed funding phase. As the name sounds, Angel investors are ‘Angels,’ they are referred to this because they are putting their money into an unproven business that is risky to invest in. Getting an angel investor is pretty easy when you’ve got the right connections. You can locate them using your network, scouring social media platforms and giving them your pitch, or you can go for startup functions.
Bank Loan
Getting a bank loan is a surefire way of guaranteeing funds. Given how the startup is in its first stage, you’ll likely qualify for a personal loan to push your operations. Banks often levy somewhere around 12% to 15% markup. Note that banks are stringent, and you’ll have to leverage something or use an asset as collateral. So before you apply for a bank loan, do your homework.
Final Word
Not all kinds of funding will be ideal for every startup. Some will require a significant cash injection at a go, while others will require continual injections. Before you select one that favors you, review all your existing finances and funding alternatives.