After developing a business idea, the next biggest concern is how to secure funding for your startup enterprise. It is common knowledge that every start-up usually requires one to invest a considerable amount of capital before the business starts to deliver profits which you will in turn plough back so that you use it in growing your business. Since you require to have funds at every step of your business the real challenge lies in raising those funds. In this article, we are going to take a detailed look at some of the most common and effective ways to raise capital for a startup.
Crowdfunding
Even though this method of fundraising is in its infancy, it is quickly gaining popularity as one of the most reliable and effective ways that one can use in raising money to finance a starting enterprise. As the name already shows, this is a process where you fund a project by the use of the funds that are contributed by the people that are involved. The entire process begins by one coming up or drawing a business proposal. Then you would be required to propose your idea to those individuals that you think will have an interest in it and will be willing to finance you.
The interested parties will have the freedom then to contribute a percentage of money that they feel they can afford. In return, they will get some equity in lieu of the amount of money that they have contributed. Some of the best websites that you can do your crowdfunding include Indiegogo, fundable and even Kickstarter.
Angel investing
This is another process through which you can get funding for your startup. Here you will get your startup funds from angel investors who are those affluent individuals who are usually eager to invest in starting businesses. The investment is in the form of equity ownership or the form of convertible debt. It is known as a convertible debt as a bond that matures after ten years. Some of the most famous companies that raised their start-up capital in this way include facebook, google, twitter and even Skype. Besides the business funds that one receives, one is likely to highly benefit from the advise, connection and mentorship that the angel investor will offer.
Friends and family
Another way that one can raise funds to finance their business startup is by getting the capital from friends and family. Since these are the people who are closest to you and they know you better, it is advisable that you turn to them for financial support, as they will be enthusiastic about the idea as opposed to when you are seeking the financing from a total stranger.
Business partner
You may not be having the money but you have a good business idea. In an instance like this, you may need to find a business partner. You will get an individual who is interested in it you pool your resources together as this will solve all your money problems. But while at it-selecting a partner ensures that you settle on an individual who you can have a good working relationship with and one that you share the same goals and vision.