Get Funding for Your Startup Through These Helpful Strategies
Looking to get funding for your startup? Read on to learn some key strategies on how to find outside capital.
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The startup world is full of uber-talented entrepreneurs that are looking to make a dent in the universe. That being said, funding for small business startups can be more difficult or onerous than expected. Many small businesses fail, so you need to be aggressive to survive as well as handle all possible business risks.
The good news? There are plenty of resources and tools that you can leverage to get the funding that your startup needs. Whether you just started your startup or are seeking funding to scale your business, you can rely on these tools and resources to find the capital that you need.
How to Get Funding for Your Startup
While there are many different sources of funding, we want to focus on seven of them. These seven strategies go a long way in helping you get the capital you need from investors to scale and grow your company.
1. Get a Bank Loan
Bank loans can be a great source of startup capital. The banking field is developing fast nowadays, so there is plenty of business programs to choose from. When seeking that loan, your bank will request different types of information about your business. This may include everything from a business plan to your latest profit and loss statement. When seeking a bank loan, you will certainly want to read the fine print. Pay close attention to the interest that you’ll need to pay and any relevant provisions if you aren’t able to pay your interest or principal.
2. Find a Strategic Partner in Advance
You can also be proactive and find strategic partners in advance. Strategic partnerships are essentially working with the investment arms of larger corporations. For instance, the Walt Disney Company has an investment arm called Steamboat Ventures that invests across the startup landscape. Leveraging strategic partnerships can provide both the outside capital and reputational benefits that can help you grow your business.
3. Join a Startup Incubator
Startup incubators are well-known funding outlets for startups. From YCombinator to smaller startup incubators located around the world, incubators leverage their expertise to help startups grow and scale. When looking at a startup incubator, make sure to look at the financial terms of participating (including if you are giving up any equity), the incubator staff and mentors, and the experiences of other startups that have left the incubator.
4. Apply to Local Angel Investor Groups
Local angel investor groups can also be excellent sources of capital. These are groups of wealthy individuals who make discrete investments in individual startups. Instead of approaching individual angels, you can pitch your startup to a group of them. This minimizes your search costs and increases the likelihood of finding capital for your startup.
5. Start a Crowdfunding Campaign
Crowdfunding campaigns have taken off in the past several years. Platforms like Kickstarter, Patreon, Indiegogo, and others let you find capital from all around the world. To start your crowdfunding campaign, you’ll need to describe your company, the amount that you are looking to raise, and the terms associated with the crowd’s investment. Crowdfunding campaigns also have the added benefit of generating buzz and hype around your product or service.
6. Request a Small Business Grant
When looking for startup capital, you can also opt for a small business grant. At their core, small business grants help startups find funding. They are notable in that they can help you scale your business without any debt. Compared to the other options on this list, grants have their own requirements and procedures. You will want to read the fine print to confirm that you are eligible to apply.
7. Approach Family and Friends
This is a tried and true method for many startups seeking capital. Friends and family can offer some of the most attractive terms out of the other options on this list. That being said, taking capital from friends and family can be stressful. You certainly don’t want to spend their money poorly, as this can lead to some awkward gatherings or holidays. Nonetheless, family and friends can be some of the best sources of startup capital.
Moving Beyond Funding For Your Small Business Startup
As you can see above, you have plenty of funding options for your startup. Better yet, none of these sources are mutually exclusive. You can raise a certain slice of capital from friends and family, another slice from a bank loan, and then another slice from your incubator. The choice is yours. While it is easy to focus on the fundraising process, there are still plenty of other things to keep in mind as you are building your startup. Some of those things include the following:
- First, write up a detailed business plan. While some startup experts may dismiss the value of business plans, they are excellent tools. They can clarify your thinking about so many aspects of your business, including the value of your product or service, how you can achieve your business goals, and how long it will take you to achieve those goals. Even if your business plan doesn’t play out the way you expect, the actual act of creating one can help you avoid unforced errors. Along with this, you may need a business plan if you are seeking a bank loan or grant.
- Next, minimize your initial business costs. This can be easier said than done. However, in the early stages of your startup, you need to operate as leanly as possible. Keep track of your burn rate and make sure that you are only spending on essential items. For instance, in terms of a tech startup, these essential items can be things like hosting costs, hardware, and social media ads. The bottom line? Spend your limited cash on essentials and only relax your discipline when you have enough financial breathing room.
- From minimizing initial business costs, you will want to find your business’s unique value proposition. No matter the product or service that you are selling, it must solve a problem or need in your customer’s life. Not only that, but your product or service must separate itself from your other competitors in the marketplace. While this isn’t easy, it is essential to scaling your startup. Therefore, step into your customers’ shoes and develop a product or service that makes a real difference in their lives.
- Finally, consider dipping into your personal savings. This will depend on whether you have personal savings that you can allocate toward your startup. That being said, this is an option if you are having trouble finding external funding. The good news about personal savings is that the terms are second to none. You aren’t giving up equity and don’t have to pay yourself interest. However, you are spending money that you may have saved for years. Keep this in mind as you are thinking about using personal savings for your startup.
Get Funding for Your Small Business Startup
As you can, there are plenty of answers to that original question of how to get funding for your startup. While it takes persistence and determination, you can certainly get the job done. The best time to take action is today. Ultimately, if you have any questions about this article, we encourage you to contact StarNavi. We offer web experts to help startups grow their businesses. Get in touch with our team today!