Having your own business is a great way to achieve flexibility in your profession as well as financial independence. However, a lot of people think of starting their own business, but often fail to actualize their ideas.
Perhaps the most common challenge that startups face is the lack of capital. In this article, we explore five clever ways through which you can raise funds for your startup.
1. Tap into crowdfunding
Crowdfunding is a viable method of raising money for startup businesses. There are numerous crowdfunding sites where you can upload a detailed description of your business and outline your goals to attract contributors. Keep in mind that crowdfunding is very competitive and your idea has to hold water before you can win the pledge for funding.
Besides the money, crowdfunding is a fantastic way to gain visibility in the market, validation and a business toehold without spending too much. In addition, this method will save you the pain of having to hand over the control of your company to investors or to qualify for business loans.
2. Look for a startup accelerator
Startup accelerators or incubators are great options for getting financial, informational and social support. They usually offer office space, business advice, and seminars where you can attract potential investors.
Incubators are sponsored locally and are geared towards bringing new talents into the spotlight. Until you can stand on your own two feet, you can also use their administrative, logistical and technical resources. Such strategies will allow you to save on extra expenses on business infrastructure. However, make sure to deal with trusted incubators only.
3. Find a partner
Looking for an investment partner is the most direct way through which you can get financial support for your startup.
Currently, large firms are adopting a trend of partnering up with young promising companies. You can look for such partners in order to save time and resources as you break new grounds in your niche.
Not only do the investing partners offer capital, but they also provide marketplace influence to their startup partners. Corporate partners also offer freebies like web hosting, office space, and unlimited email services.
4. Pitch to angel investors
Angel investors love to invest in young startup companies. Normally, they do this for a return on investment. Finding an angel investor through your personal business network can be rather painstaking. A good idea is to divert your efforts towards startup launch platforms, professional social networking sites, or angel networks.
Once you find your angel, develop a relationship to gain their trust and get them to invest in your startup. If your startup idea is based on launching a new product or an invention, you should also remember to create a prototype before pitching to investors. Angel investors have the cutting-edge equipment and unlimited resources that you can use to your advantage.
5. Keep it in the family
Another common way to raise startup funds is to get help from family and relatives. Since they are your closest allies, they most probably have faith in your endeavors and will be interested in providing financial support.
However, before you consider reaching out to family or friends, make sure that you formulate a detailed business plan. Also, do not take family-related businesses or grants lightly. Sign agreements regarding any shareholding before accepting this kind of support and inform them about the risks.
Regardless of the path you take from the options mentioned above, it is crucial that you understand what you’re getting into before you commit.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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