Never let money stop you from pursuing your dreams. Dreaming about starting your startup is good. But your “million-dollar” business idea may need funds to be successful. However, it’s not easy to finance a startup in a sea of competitors, especially if you’re in the early stages.
How To Get Funding For Your Startup?
A study suggested that only half of the small businesses in the United States will survive through their fifth year of operation. Furthermore, just 30% of those businesses make it through ten years.
Based on this information, it’s clear that failure is more frequent than success for startup companies.
But don’t worry. You can still get money from multiple sources. I’ve sketched 5 ways for you to get your startup funded below.
Consider many sources for your startup funds:
- Use your finances or Bootstrap. Instead of getting a loan or borrowing from others, see if you can finance your startup with funds you save or gather.
Do you have savings that you can use to fund your new business? Items or services you can sell to raise money? This may take a while, but you might feel more comfortable delaying your company’s launch a bit while you earn the money to get it started.
To bootstrap your startup, you need to raise funding or find seed money. After getting the fund, release an MVP as soon as possible. Once you earn money from your customers, re-invest it back into your business.
- Ask friends and family to help. Do your family and friends think that the startup idea is a good investment that will bring high returns?
If you have support from these sources, they might be interested in loaning you the startup funds or investing in your new business. Your friends or family members can become lenders, partners, or investors in the startup.
Don’t be afraid to ask your loved ones for a loan. Plus, unlike with a bank, you’ll likely be able to get some money from your friends and family without having to pay any interest.
Who knows, if you’re lucky, you might even get funds as a gift. So talk to your parents, siblings, grandparents, or even your rich aunt who travels a lot.
There’s no lunch in the world that’s free. Remember that there are some risks with this process. It’s important to negotiate an arrangement that you feel comfortable with.
- Make use of crowdfunding. There are multiple online crowdfunding platforms, such as Kickstarter, and Indiegogo, and others, to help you raise money. These websites let you share your startup idea with the public. Then, the public can donate money in return for items, services, or a share in the company.
One key to success on a crowdfunding platform is to have a unique story. You can raise money for your startup and introduce your product or service at the same time.
Don’t forget that these platforms work as a sea full of big fishes. It’s not easy to get funding when you are competing with giants. A successful campaign on these platforms usually includes social media and marketing efforts.
Also, don’t think that your startup will be automatically successful just because you secure millions in funding.
Pebble Watches raised over $10 million in 2012, which vastly exceeded their $100,000 goal.
But a highly competitive space made it difficult for this company to stand the test of time.
In 2016, Pebble announced they were ceasing daily operations. They stopped producing watches and honoring warranties and entered liquidation.
- Seek angel investors. Angel investors want to help new companies and make a profit in the long term. They have large sources of money, so your startup may be able to get all of its funding in one area through angel investment.
Angel investors tend to ask for a portion of your company or shares. They may ask to be partners or have control over startup decisions.
Because of their financial commitment, they have a vested interest in your success and want to ensure that your new business brings high returns. It’s not uncommon for these investors to be entrepreneurs or former entrepreneurs themselves.
Although money is their motivation, they are more likely to be genuinely interested in your business as well as the growth and development of particular industries.
If you find the right angel investor, you may benefit from their expert advice and management skills.
It’s more common for angel investors to supply funding to businesses when they are still in the early stages. In contrast, venture capitalists typically look to get involved a little bit later.
Launching a startup is a tough but rewarding job! Follow a profitable business plan and keep your eye on the profits so your new business can repay the startup funds as soon as possible and move on to providing you the returns you deserve.
(Helping Guide: Whether you are a first-time entrepreneur or a seasoned one, Startup Pitch Playbook can help you understand the ins and outs of startup funding, utilize winning methods to raise funds for your startup. )