How to Get Funds for Your Startup

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Lack of money must never be an obstacle to your entrepreneurial dream. Starting a business is like going to college, the investors are like scholarship sponsors. As scholarship comes in different forms, it might be provided by different groups in the form of business investments.

It is a rare incident where entrepreneurs have the necessary capital which they require to start the business since most startups require financial assistance at some point of time to succeed.

Recently, Indian prime minister Mr.Narendra Modi recently rolled out the red carpet for Indian Startups. He promised to offer tax breaks, freedom from inspector raj and simplified procedures. He observed that true entrepreneurs were not money chasers, but they possess a sense of empathy to solve varied problems. He further added, “Startup does not mean billion dollar revenues and thousands of workers. Even if a startup offers employment to five, it will take our nation forward”.

Startup founder’s success is not just about entrepreneurship but it is about taking risks, a spirit of adventure. The biggest names in the startup world currently are Uber and SoftBank. The Indian unicorns include Snapdeal, Flipkart, Paytm, Shopclues, and Ola to name a few. These and many other successful firms have overcome certain funding issues. The following are some of the funding options which are popularly believed to be some best practices in the startup world.

The following are some of the funding options which are popularly believed to be best practices in the startup world.

Self-Funding

These days we find the cost of startup of a business are at all time low, and about 90% of the startups are self-funded. It might take a bit longer inorder to save money before you get started and grow organically, but the advantage is that you do not require to give up any equity or control.

Family and Friends as a Source

As a general rule, professional investors expect that you already have commitments from this source. In case if your friends and your family members do not believe in you, do not expect outsiders to have belief in you. It is a primary source of non-personal funds for very early stage startups.

Start Crowd Funding Campaign Online

This is the newest source of funding; the investors are the crowd. People make online pledges for startups during the campaign to pre-buying the product for later delivery or to qualify for a reward such as T-shirt or any promotional item. The top three crowdfunding sites are Gofundme, Indiegogo and kickstarter.

Request for Small Business Grant

Government offers funds to support new technologies and important causes such as education, medicine, and social needs. The best place to start looking is grants.gov, which is a searchable directory of more than 1000 federal grant programs.

Apply to Local Angel Investor Groups

Most metropolitan areas have groups of local high networth individuals who are interested in supporting startups and willing to syndicate amounts nearing to million dollars for qualified startups. They tend to use online platforms such as Gusto to find them, and local networking to find those who relate to your industry and passion.

Seek a Bank Loan or Credit Card

In general, this does not happen for a new startup, unless you tend to have existing assets or good credit history that you are willing to put at risk for collateral.

Venture Capital

The venture capitalists are firms or the individuals who offer financial capital to high potential companies during the early stage of business. Venture capitalists also offer mentoring as well as a network of connections accumulated throughout the years of venturing and investing in businesses.

Getting Loans

If you do not like the hassle of finding investors for your business, you can always avail the loan. But you require to make sure that you pay back the money that you have borrowed whether or not your business succeeds. You can apply for bank loan. You can apply for a loan online via Ondeck; you can either choose payback daily or weekly. We find Ondeck supports small businesses.

Negotiating an Advance

A major customer or strategic partner who sees value in your idea must be willing to provide you an advance on royalty payments to support your business. A variation on this particular theme does include early licensing or white labeling agreements.

Joining a Startup Incubator

Organizations like Y Combinator are popular these days and are often associated with major universities, community development organization or even large companies. Most of them offer resources to startups that include providing office facilities and consulting, and they even offer seed funding as well.

Trading Equity or Services

It is often referred as bartering your skills or something you have for something you need. An example can be negotiating free office space by agreeing to support the computer systems for all other office tenents. Another example can be on exchanging equity for legal and account support.

“The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.” –Nolan Bushnell, Entrepreneur

“It’s almost always harder to raise capital than you thought it would be, and it always takes longer. So plan for that.” – Richard Harroch, Venture Capitalist and Author

raja
Published on 23-Jan-2020 12:46:07
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