Did you know that 77% of startups use personal funds to start the business?
If you’re sitting on enough startup capital, you may not need to worry about business financing. For the rest of us, we need to know how to finance a business before we can get it off the ground.
In this post, we’ll discuss some tried-and-true ways for raising startup capital. Read on to learn more!
Crowdfunding
If you’ve got a great idea, why not pitch it on a crowdfunding platform? This is where the VR headset Oculus and the wildly popular card game Exploding Kittens got their start — and you can too.
Introduce your idea to the public and explain why everyone will love it. Create a pitch, post your idea, and ask people to donate or transfer funds towards your startup.
Does it really work? Just ask the inventors of Exploding Kittens. The startup raised over $8 million on Kickstarter simply by asking people for $20 donations in exchange for a finished product.
Bootstrapping
Bootstrapping is a fancy term for financing your own business venture. If you have enough savings (like the 77% of people mentioned at the outset), you may not need to seek outside funding.
The term also applies to asking family members or close friends who have enough money to help you fund your startup. Do be careful with this option, though, as it can quickly ruin a relationship if things don’t pan out.
Bank Loans or Small Business Loans
Raising startup capital could be as simple as a trip to your local bank. There are a variety of loan options to choose from, depending on the needs of your business.
You may qualify for a term loan, a working capital loan, or a business line of credit. There are also companies that specialize in small business loans for entrepreneurs.
If this sounds like your best option, click for more information about business loans for startups.
Angel Investors
Just like a guardian angel watches over your life, angel investors watch over your business. This could be an individual, a group, or a company that believes in your idea and is willing to give you the startup capital you need.
You might also hear these individuals referred to as “venture capitalists” because they make a living out of starting new businesses. They generally have a huge financial well to draw from to fund even the biggest or most expensive startup ideas. They might also work as co-investors to fund a trusted associate or personal friend.
To snag an angel investor of your own, you’ll need a well-written business plan and a killer pitch. Keep in mind that private investors will generally expect greater results (and a bigger cut of the profits) than a traditional lender.
Start Raising Startup Capital Today
Crowdfunding, bootstrapping, and angel investors are more than just catchy phrases. These and the other ideas mentioned above are the ideal channels for raising startup capital.
Now that you know how to finance a business, what’s next? Our site is full of more helpful articles like this one, so stick around and keep browsing!