There are several stages involved in the establishment of a startup. The idea usually marks the first step of coming up with a great company. Most companies that start small and grow to become big firms all started as a simple idea. In the journey of creating a startup, one of the most important stages is the funding stage.
Once an idea has been put down into the form of a business proposal, investors can assess the investment risks associated with the business. Regardless of the stage, funding is always crucial for the growth of any startup. Let us look at some of the ways that you can source funds for your startup.
Crowdfunding is a new phenomenon that has been made possible by the web. Today, many successful companies can trace their beginnings from web platforms where they asked sourced for funds from willing investors. There are many platforms specifically designed to help entrepreneurs get funds to start their operations. The uniqueness of crowdfunding is that contribution comes from a large number of people. This makes it a great way to raise sizeable funds without having to get into unmanageable funding deals.
- Loans and Grants
Getting loans is probably one of the oldest forms of sourcing funds. Various institutions including banks and other organizations are always willing to give money to entrepreneurs who have great potential. Loans for businesses are usually given by banks and they often come with agreeable terms. Grants are on the other hand offered by governments. The uniqueness of both loans and grants is that they are facilitated by institutions that are looking for specific kinds of target entrepreneurs. If your startup is in line with the requirements of the funding institutions, you can be able to take advantage of the opportunities.
Investors are also a great source of funds for startups. An investor is any person or entity willing to give a startup the required capital to start business operations. Investors can either be in the business or family realms. In the business world, you will find venture capitalists who provide investment to startups. Venture capital funding accounts for a significant share of annual investments in the world. While only 0.05% of startups are funded by VCs, the market itself is worth billions. Eligible startups go through rounds of funding which include Series A funding, Series B funding, and Series C funding. These rounds of funding mark the different stages of a growing startup.
- Family and Friends
Since the advent of civilization, businesses have been funded by the family and friends’ circles. Indeed, some of the most recognizable brands in the market have been funded this way. While most investors might find it hard to understand your idea, people close to you might immediately recognize potential in your startup.
Money that comes from personal circles is given in trust and the funders might be a great source of encouragement too. Startups funded from personal circles are also less likely to fail because all the parties involved in the business are invested in both the company and personal relationships.
What Are Some Important Resources For Companies in the Market?
Companies looking to either get funding or to work with startups that have received funding need to utilize the data available in the market. After funding, every company looks to get business partners that can help it move from one stage to the next. The challenge for most firms looking to work with startups is that there are barely any platforms available to connect firms to other firms. Tools and resources that provide data about recently funded startups are thus vital. Fundz is one particular company that acts as a source of vital information for companies looking to work with recently-funded startups. This company has a platform where information about startups receiving funding is updated regularly. The platform thus acts as a crucial link between startups and companies by providing information about industries and locations where there is activity.
There are multiple ways of raising funds for a startup. 77% of small businesses are said to rely on personal savings to kickstart the business. This might not be enough in the long-run though. The most important thing is to go for funding that is accessible and sensible. Any startup looking to get funds must have enough information about the business that will make it possible for investors to be willing to invest. Information is thus crucial for startups that want to get funding for business operations.