Ways to Get Funding for Startup
1. Crowdfunding for Startups
One way to get startup funding is through crowdfunding. Crowdfunding is one of the fastest and safest ways to get funds. Why? Because the crowd isn’t going to ask you to give it back. They just want the product or the service that you promised to offer. So, how does it go?
Well, check Kickstarter, Indiegogo, Patreon, and you will see that these are some crowdfunding sources that allow the crowd to get products for funding the startup. Many reputable startups have become successful using the crowdfunding tactic.
Tips for Getting Crowdfunding
- Create a killer product or prototype that solves a problem
- Make video shots of the product’s use cases
2. Angel Investors
Angel investors are private investors who invest during the seed funding stage. That’s why they are called ‘angels’ because of the risk of investing in a new company is higher than usual. Seeking an angel investor for your company is fairly easy if you have the right connections. You can find them through your own network, searching on social media websites and then sending them your startup pitch, or by attending startup events.
Tips for Raising Angel Investment
- Build relationships early and don’t wait for the right time to pitch. You never know when you are getting the right deal.
- Build a solid product and develop as much traction as you get. Don’t go for investors, let them come to you.
3. VC Firms
A Venture Capital Firm is a limited partnership or limited liability company that invests in startup businesses with potential for a high return on investment for their pool of investors. Most VC firms are actively hunting for startups that want to get funds in return for equity. But you can also find them directly through their websites or via startup events. The best way to find VC firms is by attending startup pitching sessions. The best example of this is Shark Tank, where you tend to pitch for investment to sharks in the tank.
Tips for Attracting VC Firms
- As mentioned above, make a killer product and VC firms won’t deny your application.
- The only thing VC firms see in your startup is if they can get a return on their investment. They are there to double-in their money. If your product can grant then that, they will be more than happy to invest.
4. Startup Incubators
Startup incubators don’t usually want equity unless they are also providing some kind of funding for startups. In most cases, they simply incubate and mature the startups so that they can apply to the accelerator programs. The duration of incubation can vary from three months to a year. Most startup incubators provide mentorship, office space, and even help startups meet angel investors. But, there are some incubators that like startups to get funds from them in return for a share in the startup. Make sure to check this while applying there.
Tips for Getting into a Startup Incubator
- Have a workable product. Also, be open to feedback from mentors.
- Build your network with the right people. Get traction for your product.
5. Bank Loan
You can also go for bank loans for your startup. Banks usually charge somewhere between 12% to 15% markup on your money. Also, you will have to place a guarantee before you take the money from the banks. This can be your house’s documents or any other asset that belongs to you.
The bank loan isn’t a safe option because, if for some reason your startup fails, you will be left with nothing, nor your business, nor your asset.
Tips for Getting Bank Loan for Your Startup:
- You will be eligible for a personal loan since the business is still in its initial stage.
- Banks are quite strict with deadlines of loans, so you need to ensure that you do proper homework before applying for the loan
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