Getting start-up funding is not easy, but it's necessary for
most companies. Business is all about being able to expand and hire more staff,
but if your start-up does not have the required funds, your venture will
stagnate. The good news is that there are ways for start-ups to get
funding...and it's not as difficult or scary as some may think. This post will
cover five ways start-ups can get more funding:
Angel Investors
There are several ways to find angel investors. Some angels
prefer to invest incrementally, and they may give a small investment upfront
and follow up later with a more significant investment if the start-up meets
specific criteria.
Angel investing platforms facilitate this exchange by
connecting start-up founders with angel investors willing to help with specific
business areas. Some angels invest in more than one business, while others
focus on a particular industry or product.
First, find angel investors through referrals. Many angel
investors connect with companies via referrals, so finding them through
networking events can help you increase your chances of securing angel funding.
Attend angel investor events in your area - these pop up now
and then and are a great way to meet potential funders. In addition, reach out
to other business owners - their connections may know angel investors and are
interested in investing in your company.
Nonprofit Micro Lenders
Small businesses can receive start-up financing through
non-profit microlenders. Microlenders typically provide smaller funding, ranging
from $500 to $50,000. The loans are repaid with profits from the business.
These loans provide a start-up credit history for many small
business owners with little or no other form of collateral. In addition,
microlenders are more likely to approve loans with lower interest rates than
banks and credit unions.
Instead of having to rely on institutions, which are often
hard-pressed for cash but still have plenty of resources available, private investment technology lets
start-ups tap into the expertise and capital of other investors in their
industry”who may not be as sophisticated but who have plenty of money at their
disposal.
If you don't have one, hire a professional to help you
project your start-up expenses. Make sure that the projected profits can pay off
the loan. Once you've determined your finances, create a business plan to
justify your need for start-up funding.
SBA Loans
SBA loans are a popular source of funding for start-ups, but
they also come with caveats. For instance, not all applicants can qualify for
the same amount, and there are stricter eligibility requirements than
traditional bank loans.
Start-ups primarily focused on operating illegally or
specializing in lending or that have not yet been profitable enough to warrant
a larger loan are not the best candidates.
Since a start-up has little history, lenders view it as a
riskier endeavour. While an established business may have evidence of its
success, start-ups rely solely on their business plan and industry experience to
demonstrate their viability.
Because of this, their ideas are still new and have not yet
been proven by lending institutions. As a result, the SBA has developed a loan
program that provides a unique opportunity for start-ups to get more funding.
Crowdfunding
According to U.S . Small Business Administration,
crowdfunding isn't the only way for start-ups to get funding, but it is an
excellent means of building a clientele base for SMEs. In addition to using
crowdfunding for start-ups to obtain additional funding, you can also use it to
make donations.
One of the most common types of crowdfunding is reward-based
crowdfunding, which rewards donors who donate a certain amount. This
crowdfunding can help start-ups of all sizes, from small businesses to large
organizations.
If you're planning to raise funds for a start-up, you can
offer different rewards, such as pre-released products or enticements.
Get Out Of Your Office
It is vital to stress that start-ups must get out of the
building and find customers buying their products. If you spend more time
looking for more fundraising money than building a product, you'll likely have
a tough time finding funding. You have to have something that people will pay
for to get investors interested, and there's always the risk that they won't
come back if they don't see results, which will leave you with nothing.
