Modern times offer the luxury of choosing from a plethora of options. Finding investors is possible if your startup idea is excellent. As funding is necessary, learn more about funding options.
Funding sources to grow a startup
Family and friends
Having an established idea is not enough. Make an attractive source to initiate startup funding. Set flexible terms, but remember, family and friend funds resulting in fallouts, may lead to lawsuits.
Startup funding is mostly from family and friends. It is the seed funding, where you give a percentage of your equity against the funds. If not, repay the amount later.
Tips to avail from family and friends of the startup funding
- Demonstrate your plan and brief them regularly.
- Document the commitments, outlining financial options, keeping it professional.
Bootstrapping
Bootstrapping is an ideal option for Startup funding. It is to start using your resources and funds. It is a great way of enjoying ownership and becoming self-dependent. However, scaling up with bootstrapping is difficult, as your hard-earned money vanishes.
Tips for Bootstrapping
- Start only, if you are certain of your funds to keep you going for the coming three years.
- Support your business by initiating a side gig.
Bank Loan
Go for bank loans. Bear in mind the charges are around 12 % to 15% on the loan money. Besides, you must place a guarantee; it may be any of your valuable assets. A bank loan is an unsafe option because if you fail in the startup business, you become zero. Learn more about bank loans.
Tips to avail of bank loan
- Initially, you can avail of a personal loan.
- The bank loan deadlines are strict, so do proper homework and consider applying for a bank loan.
Crowdfunding
Startup funding through crowdfunding is the safest and fastest. Using crowdfunding sources for startups is best as they want you to offer the promised service or product. Crowdfunding is crowdsourcing form and alternative finance. It is a venture that raises money typically through the internet from large crowds, involving lots of people.
Tips to avail of Crowdfunding
- Develop a killer product to solve a problem
- Make video shots of how the product is in use
VC Firms
VC refers to a Venture Capital firm investing in a startup business. It is a limited liability company or partnership. It invests to earn a high ROI for its investors. The VC firms keep hunting for startups that you can find them through websites directly. Learn more by attending a few sessions on startup pitching.
Tips to attract VC Firms
- VC Firms will not deny you support if you develop a killer product.
- VC firms work to get a suitable and high ROI. They just want to see the money double. If your product assures that, they will invest happily.
Govt Grants / Programs
The government grants for startups are many, but nothing comes for free. You may acquire grants from funding options for non-profit startups. However, you may get loans from for-profit startups as startup funding, as well as government grants.
Tips to avail Govt Grants
- The government has strict policies about the employees you can hire. Do not miss out on the policies and rules, as they are government grants.
- Government grants also require you to furnish a suitable business plan. You must develop a package of loans with a participating lender. It is helpful because, in case you become the default, the government pays that person.
