Picture this: you’ve come up with a killer idea for a company. You know this one will be a hit with your consumers, and you’re excited to get out there and start building your company up. There’s only one problem: you don’t know how to fund a startup.
Many small business owners run into this problem. Without a good source of cash, it can be tough to get your business off the ground.
There are many different ways to fund a startup. We’ll dive into some of the most popular ones here and give you some essential tips for raising money for a startup company.
Get a Loan
This is one of the most straightforward ways to fund your startup. Need cash? Just borrow it.
Unfortunately, some small businesses (and especially startups) do not qualify for traditional bank loans.
Thus, it can be important to look for more creative ways to raise funds.
This funding method has become more popular lately with the rise of popular crowdfunding websites and the passage of the JOBS Act.
Crowdfunding can be a potent and organic method of raising money for a startup. A tip for crowdfunding is to focus on your advertising, even before completion.
Of course, if you are going to crowdfund, you need to commit to your customers about what precisely you want to produce and how you are going to produce it.
Also, be careful of some crowdfunding sites. They sometimes will require you to raise the full amount you are seeking to keep any of the money.
Additionally, you’ll be on the hook for anything you say during the crowdfunding campaign.
Get an Advance
Some companies will give you a cash advance in return for royalty payments. This is, in some ways, better than getting a loan because you don’t have to repay the same amount of money with interest.
Make sure the royalty isn’t too high, though! You don’t want your investment money to turn into a drain on the resources of your company.
The money you make from selling your product is the backbone of your company, especially when you’re starting a startup — don’t give it away easily.
Apply to Angel Investors
Angel investors, also known as venture capitalists, invest in businesses in exchange for a share of the company’s equity. Some even do it on popular TV shows.
These investors can not only provide you with funds, but they can also provide you with valuable experience and connections.
Make sure you apply to multiple angel investors to find the right investor for you!
Need More Info About How to Fund a Startup?
We hope these tips have given you some ideas about the most popular ways business owners fund their startups.
Do you want tailored advice about funding your startup? Check out our Accelerator Program; that’s sure to give you all the information you need about how to fund a startup.