A Guide to Startup Financing
Information about A Guide to Startup Financing
One of the hurdles you have to overcome when starting your startup is getting funds. There are many great businesses that did not materialize because they did not get funding.
It is not easy to launch and run a startup. You need a lot of determination and focus. According to statistics, only half of the startups in the US get to their fifth anniversary.
Only 30% of startups reach a decade. This makes the chances of failing higher than of succeeding. Below are some ways of securing funds for your startup.
1. Having an elaborate business plan
Most lenders will be looking at what they gain when they invest in the venture. Make sure you highlight your financial projections in your business plan because it is going to capture the attention of investors and lenders. The business plan is important because it provides guidelines on how the business runs, what you offer in the market, and your identity.
It also has a detailed analysis of your target market and shows the loopholes in your competitor’s competition that you are going to take advantage of. The business plan needs to have an open organizational structure that shows the roles and responsibilities of the stakeholders.
2. Asking for help from friends and family
Friends and family make the second most reliable funding source. The love and goodwill are going to go a long way in helping you get the funding you need for your startup. Getting funding from friends and family is great because the funds come with little to no interest. If you choose this method of funding and remember those good relations are at stake.
The internet is a great tool that you can use to secure funds. There are many crowdfunding websites out there to choose from. Some of the most common are;
There are investors online ready to invest in your business because they are looking for something good to put their money in. These sites will help you get to investor platforms that your business idea is going to get noticed. There are many startups that have succeeded because of crowdfunding. A good example of such a startup is Oculus Rift which had a target of $250,000 but it raised $2.4 million.
4. Angel investors
There are a couple of stages of funding every business needs to go through. Startups will start with Series A Funding to B and C if necessary. Angel investors can be very crucial during the first round of funding. Their investment is most likely going to be indebted, but they provide you with a good way to start your business. Angel investors are going to be involved in the earlier stages of your business, and then you are on your own after that. They also operate independently without advisors or committees.
5. The local bank or an online lender
Having a good relationship with your local bank is going to help you a lot because it will increase your chances of getting a loan. Make sure you have your business plan with you because you have to convince the loan officer. If you fail to get a bank loan, don’t lose hope because there are other ways of getting funding.
There are online lenders like Lending Club Business Loans, U.S. Business Funding, and others that can lend you. This can be the ticket to a successful startup.
6. Taking from your savings account
If you have saved some money, it can be a good way of funding your business. There are benefits you can expect to get when you choose this type of funding. You don’t have to share the profits with anyone and you don’t have to worry about being followed by debtors to pay up. You also don’t have to give equity away. This is a risky path if the startup fails because you are going to take up all the losses.
Partnerships have been used by successful companies. Partners are going to bring in new ideas and solutions to your startup and also share the liabilities. The profits are also going to be shared. The main con of this method is possible disagreements. Alternatively you can seek venture capital funding.
Before you go out and look for more funding, it is a good idea to evaluate your initial costs. You can maximize on the little you have and find you even don’t need extra funding. It is no mean task to start a business venture because it needs funding. You should get funding from available sources. The tips above are going to help you with that.