When it comes to a typical startup, it is quite common to go through several rounds of funding, and at every level, you need to have enough funding in order to meet the requirements as well as to shift the gear towards the following level. Not every startup can able to meet this requirement and ultimately need to shut down the business doors. Only a few startups manage to get this in the right direction and take the business to the next level. There is no doubt that handling competitors and funding are quite easy in comparison to investors. Using the right channels for the purpose of funding at every level of business is essential to ensure that business can strive in today’s cut-throat competitive market.
Let’s discuss how you can utilize the right channel for funding for your business startup:
Even before you check out for other possibilities and options of funding, first try to arrange as much as possible from your own savings and bank balance. You will not have to pay any interest on this amount immediately. But of course, in the due period of time, you will have to roll this amount to ensure that the capital investment is set aside so that it can be utilized again when required. It is always better to tap into your own option like savings, home equity, and retirement accounts, etc. This can be arranged easily and also reduce the headache of interest payment and capital return at the initial struggling years.
Taking assistance from family and friends
Even before you approach a moneylender, it is always the second-best option to check out with your close friends and family members. It cannot be denied that this is one of the major sources of funding for startup companies. If you have a rich family background, then obviously it is a huge benefit. You can borrow the required amount from your parents to put into your business. And it is needless to say that your parents will be happy to see your career flourishing.
Get a business grant from the government
Several government plans and schemes available for encouraging startup companies. If you can produce a mind-blowing business plan using a realistic and smart approach, then you can easily manage to get huge investment according to the need of your project. Of course, they will not fund your whole project, but you can easily get a part of your financial requirement managed from their investment. This is a convenient and safe mode of borrowing business fund. As compared to private funding agencies you will have to pay a lower rate of interest and well as other charges.
Funding through Angel investors
As similar to venture capitals, this also concentrates on offering capital funds to new business start-ups. Basically, they offer funds for smaller operations. The main fact is that they will take the major part of your business profits. Some of them even charge around 49% of the profit amount. So, this should not be your first funding plan. In case you find that the easy options for funding are not working for you, then you can check out with this option. But before signing the agreement, it is essential that you read through it carefully.
Crowdfunding campaign
This is known for being one of the recent ways of pooling funds for business requirements. A number of platforms are available, which can help you with group funding campaigns. In this case, entrepreneurs will have to provide a detailed description of their business plans followed by business goals and financial strategies. Businesses and individuals that trust in the initiative will provide the initial funding.
Bank business loan
It is one of the best ways of managing funds for your startup company. Easy monthly installments are available for loan repayment. The best part is you will not have to share the company profits with the bank. Simply, just repay the monthly installments including the interest rate.
Approaching venture capital investors
This is a special professional group that is set up specifically with the motto of funding startups. There are several firms in the market that need this kind of funding. In return, the capital investors expect a part of your company’s share of profit. They will invest in your business only if you can make them believe that your plan is hundred percent successful and it will prove itself in the long duration. However, in return, you can always expect that they will be looking for huge opportunities in your business. Always remember, your business plan needs to be stable and completely realistic. This kind of team also includes experts in the industry who will analyze your plan before it is finally approved for funding.
Become a unit of the startup accelerator or incubator
Like venture capital, startup accelerators or incubator also involved offering the required funds for startup companies. These are individuals and do not comprise Group of Companies. Also, they are known as seed firms.
Private equity firms
This is known for being a traditional path for investors for funding, but still, it is no doubt great access to funding all kinds of startup firms. The range of investment can be anything between thousands to even millions. It all depends on the requirement of your startup company.
Important facts to consider before taking debts
There are several funding companies in the market which will show you eagerness to offer you the funding amount. But be aware of such companies because they do this to lure the customers in the first instance and then take opportunities to bag huge returns. They can even make you sign an inappropriate agreement in return for the capital funding. So, when you finally decide to opt for a debt option, it is essential that you look for the best person or company to approach. It may cost you a little extra at times, but it is much better and safer as compared to fraud funding companies.
Numerous options have been stated above for your convenience. So, choose the one which fits your requirement list. Before going for a particular option, you should always think about the related facts. Do not take a hasty decision; think several times before taking a step.
