The bitter truth about startups – no matter how great or exceptional your idea is, one of the crucial elements that play an important role in every business success is- obtaining sufficient funds. Raising funds for a startup is a prerequisite to pave the way for long-term growth and success. Also, many businesses either fund their new company from their own capital or borrow money from friends and family. However there are other options available for Business Funding For Startup, one can opt for. That said, as a startup founder you must understand that raising capital is not easy, it may take more time than predicted, especially for those with a poor credit score.
Let’s walk through to find some of the best funding options available for your startup!
Angel Investors
Angel investors are a group of individuals or investors who fund their own money in a company at the initial stage. Their focus is on getting outsized returns on investment. So, already established companies and low-growth businesses may not get funding from angel investors. Some of the high-profile success stories of angel investors include Uber, Facebook, and Google.
Getting Business Funding For Startup Companies from angel investors may seem like a daunting task, but here are a few aspects that angel investors often care about:
- How passionate is a founder for the growth of their business?
- How much potential does the company have to scale in the hyper-competitive market?
- A clear business plan with some evidence of procuring traction.
The best method to find an angel to invest in your business is via networks or friends of an angel, through some reliable websites, and angel investor’s networks. Besides this, if angel investors are well-versed with your business niche chances of getting funds are higher.
Venture Capital
Acquiring Business Funding For Startup from Venture Capital (VC) is not easy, may not necessarily be for all startups. Usually, VC often invests in technology-driven companies with substantial growth rates in the sector including IT (Information technology), Biotechnology, SaaS, and communication. Additionally, VC firms not only provide funds but also offer strategic assistance such as helping businesses meet with potential customers, future partners, and most importantly dedicated employees, and much more.
Furthermore, it’s pivotal to understand that before approaching any VC for funding it’s better to comprehend whether their niche of industry is aligned with your business. Along with this, as a startup founder be prepared with a solid “pitch” and robust investor deck to attract the VC. Also worth noting, getting funds from a VC firm can be a time-consuming task, it may take weeks to meet the VC firm head followed up with conversations, presentations, and meetings.
Here are some key aspects looked at by VC before investment:
- What is the liquidation process (VC often take the share in the company)
- What type of investment is required (stock or any other)
- How much is the company’s valuation at the time of investment
Now, you must be pondering how to find VC firms or investors, the best way to find them is via startup events and websites.
Crowdfunding
Another ideal option for a startup founder to raise capital is through crowdfunding websites. Simply put, when a business raises funds from the public without using the conventional methods it’s crowdfunding. Most of the crowdfunding happens with campaigns being launched on crowdfunding websites. To add, there are two types of crowdfunding options available for startups, Reward-based crowdfunding, and equity crowdfunding.
However, it may seem easy to raise funds via crowdfunding i.e. list the money requirement, click a few options, create a campaign, and you get the money! But of course, the reality is different, it’s not easy to raise capital through crowdfunding, just like any other funding option. As a founder, you need a strong business plan with execution and a powerful strategy. Crowdfunding websites are creating new ways for the public to generate funds and enjoy rewards or equity!
Do you need funds for your business?
Now you are well-versed with some of the best viable options to get Business Funding For Startup Companies. It’s time to get in touch with professionals, secure the much-needed funds, eliminate the unwanted gatekeepers and hop on the bandwagon of success.
