Several studies have shown that most of the startups fail due to the lack of money in the very beginning. Business is all about funds and constant monetary investments. Lack of money may lead towards the failure of a startup. However, getting proper fund for a new startup is not that easy as it might seem. No matter, how bright the idea is, in order to get good investors one needs to be perfect at almost everything. Here are few ways that might be helpful to raise money for a startup-
Another term for this is bootstrapping. This is simply the best and easiest way if you have the money. Sometimes friends or family members might help in launching the business. This method is the least complicated and least formal one. One of the biggest benefits of self-funding is that the interest rate is pretty low. Even if the money gets borrowed from the relatives they remain flexible about the time duration of paying back and the rate of interest. Starting the business with one’s own money has other advantages too. There is no necessity of selling the equity. The investment of one’s own money makes one work harder and make the business profile look good for future investments.
However, most of times the startups do not have enough money to start on their own. There comes the option of crowdfunding to the rescue. In this method, the startup company borrows money but not from only one investor or person but from many people at once. There are various platforms available for this purpose where an entrepreneur might advertise for himself or herself. Based on the goals, business strategy and the necessity the consumers contribute as per their will. This method has become immensely popular in recent times. One of the biggest advantages of this method is that one gets to start marketing for their products even before the business has started.
- Government Grants:
This is one of the most neglected ways of funding a startup. Most of the people with the dreams of their startup are not aware of all the opportunities the government might be interested to offer. In order to promote business for the health of the economy the government often offers loans for the new entrepreneurs. Thus, being aware of these opportunities might be extremely helpful for funding a new startup.
- Angel Investors:
These are the people who are very much interested in business and always looking for opportunities to invest and earn more. Sometimes they work in-group and might even offer being a mentor for the business. However, there are some cons of this method. For instance, they expect a big share of equity in return and the amount of funding is not always enough.
- Venture Capital:
It is professional funds for startups with good potential. These are the best bets for startups already in the process of making profits. The money is good here but the loyalty is not guaranteed. They would want to get their money back at the soonest.
These are few useful methods of funding a startup.