If you are tired of working traditional 9 to 5 jobs and want to carve out your own path, then perhaps you have what it takes to be an entrepreneur. Being an entrepreneur can also be intimidating because of the colossal amount of work you may have to do in the initial years to climb the ladder of success.
One of the first things you need to do for your startup is to raise a good amount of money for your business product. And for that, your business idea or product needs to be impressive and promising. An entrepreneur needs to believe in their idea or product even when the world thinks otherwise.
If your startup becomes successful and continues to grow, it will have many compliances and regulations to follow. You will need to juggle many obligations, from having to pay all your staff, ensuring regular cash distribution and working on your brand presence as well.
Some Funding Options for You
You Can Start by Self-Funding
Funding yourself initially might be an ideal way to go about growing your startup. This initial investment from your savings might be enough to cover the costs of commencing your startup business. At least, in the initial phases, make sure you are only continually funding your startup if your business shows promising signs of growth.
As you grow this way, you may soon find the business is capable of paying itself. Going down this route, however, is not so easy.
Asking Those Close to You
You could also consider having your startup financed by one or more family members. You can receive loans from your friends as well. If you go for this option, you need to be aware that this option can often have repercussions and consequences on your relationships and friendship if you are unable to pay back your loan on time.
You could go about raising funds through several funders. To try this option, check out the most popular crowdfunding websites. You need to set your crowdfunding campaign to tell your story and talk about who you are, explain your startup and the nature of the products or services offered. The funders who will want to fund your startup may usually ask for some return benefit or profit share.
Having put yourself out there in the market, you may perhaps find a company taking a keen interest in your idea. When the company decides to fund you, this is called partner financing. By way of an agreement, a company may even offer to take up your company into itself and provide you with all the resources you need to work on developing your idea. But keep in mind that such agreements will result in the loss of control over your startup.
Grants from Government
See if your startup is lucky enough to receive a grant from the Government. Governments like to give grants to encourage growth in the economy and help foster innovation and creativity. The good thing about grants is that you don’t have to pay them back, although the grant may come with a set of strict guidelines on how you are supposed to use the money for your startup. Grants may not necessarily be for the startup itself but maybe more project-focused.
Also, the government may even give you a loan with reasonable repayment terms. However, it is generally challenging for entrepreneurs to be eligible for receiving those loans.
Get A Loan From The Bank
You will need to fill out a loan application. The Bank will review your application and determine your ability to pay back the loan. It will see if your project is feasible. Once you are given a loan, you will have to repay it regularly with interest for the specified time. Explore your options and be clear on the terms and interest rates.
Consider Accelerator and Incubator Programs
Accelerator programs can be a great option when your startup is in its initial phases. They offer a time-bound support service to help you get ready to receive investments much faster. Accelerators will provide you with a good network and mentorship for you to have a good, workable business plan, and they will also provide you with other resources.
Incubators are non-profit entities that may be publicly owned or privately owned. They will meet your early infrastructural needs by providing you with office space and basic management training to provide technical services.
Venture Capital (VC) Firms
Getting your startup financed by a VC firm is no mean feat. Venture Capitalists will only want to invest when they are sure that your startup has a high potential to grow. To get VC financing, you will need to have a good ‘pitch’. There will be many meetings you will need to attend and due diligence to be done.
To Sum Up
Without fundraising, your startup is not likely to have a good foundational base. Raising funds from one or more sources is essential for your startup to cover its initial costs and capture the market. Go for a suitable option after having weighed all the pros and cons.