According to reports, over 85% of businesses shut down their operations. Lack of funding is perhaps the most common issue which turns them to close. So, what are some genuine startup funding options, you can leverage to grow your ideas?
In this blog post, we will elaborate on some of the best funding options for startups that will help you raise funds for your business from genuine capitals. Let’s gauge through some quick and easy startup funding options that are available worldwide.
In layman’s terms, bootstrapping means growing a business from the scratch with nothing but personal savings. One of the most realistic startup funding options, bootstrapping solely depends on your savings, friend’s sake, luck, and profits from your first sales.
It is perhaps the finest funding option for first-time entrepreneurs, who may have trouble getting funded without showing transactions and potential growth to accomplish success and an edge over the competition.
Bootstrapping is the most genuine startup funding option because of its benefits. Because if your money is invested into an idea, you are likely to tie to that business for long. However, this is only suitable for small businesses with initial requirements. If you are stressed about extravagance, here are some easy tips to save money.
Have you ever sat in a campus placement? If yes then only you can relate to crowdfunding. If you come with a solid roadmap for your business establishment and growth, it is perhaps the best startup funding option to feed your ideas.
Take it as simple as a bank loan. In crowdfunding, you show your ideas to the crowd and get funded by multiple individuals from the crowd. There are multiple ways to raise funds for your business ideas through crowdfunding. You can either visit online crowdfunding platforms or participate in a crowdfunding workshop.
While crowdfunding is a popular way to raise large funds, the competition is so high. So, we would recommend you jump into the oceans of crowdfunding with a solid roadmap and planning.
- Angel Investment
If you are looking for an investor for your startup, chances are an angel investor might be looking for you. Angel investors simply provide capital for startups, in exchange for either convertible debt or taking an equity position in the firm.
Equity financing is often leveraged by non-established businesses or ideas that don’t have enough cash flow or collateral for raising secure business loans from financial organizations. Angel investors have backed some of the leading websites too, including Google, Yahoo, and Alibaba. Angel investment is perhaps the best among the leading startup funding options, but it is its own shortcomings. Angel investors usually make lesser investments compared to venture capitalists. But, if you believe your ideas are backed with passion rather than the greed of earning money, angel investment is undoubtedly the best option for funding your startup.
- Venture Capitals
Venture capital is undoubtedly one of the best startup funding options for big bats. These capitals usually come from established investors, banks, and financial institutions. Venture capitalists often invest in ideas with great potential to grow. They invest in businesses against equity and exit at the time of an IPO and acquisition.
Venture capital is one of the best funding options for startups and small businesses that are generating some revenue and looking forward to growing to the next level. Some of the fastest-growing firms as Ali Baba, Uber, and Flipkart have leveraged this exit strategy to make millions of dollars in the span of months.
Besides plenty of benefits, venture capital has a few downsides as well. Venture capitals usually give a 3-5 years window to recover the investment in the company. So, if you are working on ideas that might take longer to grow, venture capital is not for you.
Here are some of the best venture capital firms in the world to raise funds for your business.
- Business Incubators and Accelerators
If you are at the early stage of your business, you may consider incubators and accelerators as the best funding option for your startup. These incubators provide maximum support to entrepreneurs to execute their business ideas and accelerators expand the growth of existing companies with an MVP (minimal viable product).
This is one of the most realistic startup funding options which usually takes 4-5 months. One of the greatest benefits of raising funds from incubators and accelerators is credentialing. Besides A grade funding for your business, you get an opportunity to build relations with mentors, investors, and other fellow startups that might give you a good start in the market.
Leading companies in the United States like Airbnb and Dropbox were started with incubators and accelerators.
We hope you’ve got enough insights to raise funds for your startup. But, if you really want to grow fast and get an edge over your competitors, outside investors such as venture capitalists and crowdfunding would be the finest funding options for your startup.