8 Steps to secure funding for your Startup

Trying to find investors or a venture capital to invest in your company could be a little challenging. You have talked to family and friends they think your idea is fantastic however the more you try yo convince them, the more frustration it could be.

Here are eight steps you can use to secure funding for your Startup Business.

1. Seeking and applying for local Grants

Grants are often offered by local or fedearl institution or NGO. While these money may be available without taxes and returns from donors, It is often required that you demonstrate the impact of your project on the society or show relationship between your projects or Business and how it can improve peoples lives. Most of these grants are usually associated with social projects.

These financial form of help can also help you save money on premises and fixed rates, purchase cheaper IT or manufacturing equipment and fund staff training. The main drawback, of course, is the fierce competitiveness of such grants, as well as the box-ticking involved: it can be a frustratingly drawn-out process, but that’s the tradeoff for retaining equity. In the US, start-up grants are offered by organizations such as Small Business Innovation Research (SBIR), the National Association for the Self-Employed (NASE) and Idea Cafe.

2. Crowdfund

Person's Hand Protecting Stacked Banknotes Surrounded By Human Figures

GETTY

Crowdfunding is a favorite of the digital economy, and probably the quickest way of obtaining finance for a new business. You don’t even have to be massively tech-savvy to launch a crowdfunding campaign, but what you do need is a compelling pitch, one which strongly references your start-up’s potential for growth, as well as a knack for interacting with your cash-rich community. If all goes to plan, you’ll have capital you don’t need to pay back, without ceding any operational control. As a side benefit, crowdfunding is a nifty form of advertising, a way of stimulating public interest in your company before it’s even made its debut. The difficulty, needless to say, is in getting your voice heard in the vast crowdfunding landscape.

3. Family and friends

The idea of hitting friends and family for cash doesn’t sit well with some entrepreneurs, but many of the world’s top magnates readily admit to borrowing from their social network early in their careers. As such, you should have no compunction about doing the same. Soliciting short- or long-term loans from friends and family might lead to some domestic squabbles down the road, but you won’t usually have to pay them back with interest added. Indeed, you might not have to pay loans back at all, depending on the generosity of your creditor. On the other hand, it’s not easy to put together a hefty bankroll relying solely on family and friends; and you have to ask yourself whether you really want to risk straining meaningful relationships.

4. Get an angel investor on board

Don’t pray to the angels; seek angel investors. Targeting high net-worth individuals who have a track record of supporting start-ups isn’t difficult to do, but the challenge lies in convincing them you’re worthy of their investment. There are many online angel investment networks, as well as local investor groups you can pitch to in person, so do your research and start submitting your pitches. Find the right angel investor and not only will you benefit from their financial support but also their wisdom: oftentimes, they offer mentorship as a side dish alongside their capital. On the other hand, they generally offer less financial backing than banks and venture capital funds.

5. Raise money yourself

Entrepreneurs are a hardy, headstrong bunch and many elect to fund their business all by themselves. Breezing past the bank, they sell their possessions, save money from their day job, invest in various endeavors and free up capital by remortgaging (OK, that one does require a hasty U-turn to the bank). By going it alone, you’ll retain complete control and be unburdened of the interest and strain of other avenues. And this decision has a precedent: over 90% of start-ups get up and running without the aid of loans or grants. On the other hand, raising money can become a full-time job in its own right – taking your attention from your business. To bootstrap or not to bootstrap: that is the question.

6. Seek venture capital

Finding a venture capitalist who shares your vision, or at the very least believes in your ability to turn your idea into a successful, profitable venture, is a good way of raising cash. Of course, you will need a fine-tuned business model, ideally one that’s ready to scale. The main con with this option is that venture capitalists are typically looking for the next big thing, and so many entrepreneurs struggle to convey the scale-ability of their enterprise. Venture capital funds, by their very nature, have a short shelf life as they generally seek to recover their investment, turn a profit then move on to the next fresh start-up.

7. Good ol’ bank loan or line-of-credit

closeup of a young businessman using a tablet on a table full of charts

GETTY