For anyone who has wondered how to build your startup, one of the biggest questions you may have is how to get funding. You may have a well-thought-out business plan with meticulous detail, but this won’t matter if you don’t have the money to turn your idea into a reality.
If your startup is tech-based, you are lucky because it will be much easier to find investors who are willing to provide you with the startup capital you need to fund your business. However, for startups in other sectors, it can be a sticking point. So, here are some realistic funding options for your startup.
One of the most common ways to get your own business up and running is bootstrapping, which simply means using your own personal savings for funding. Many people save up for years, so they have enough money to start their own business. However, the downside to this is that there is a chance that you could lose your personal assets. It's always a gamble with business, and here, you are gambling with your own money.
Entrepreneurs today are lucky because they have the option of crowdfunding. So, if you know how to build your startup, you can rely on the power of crowdfunding to get your business up and running. There are a number of crowdfunding websites you can use where all you need to do is pitch your business idea and people interested can contribute how much ever amount till you reach your goal.
• Bank loans
You can also apply for bank loans for funding your startup. However, you need to have a solid and detailed business plan containing an estimated maturity time, profit forecast, etc. which you need to show to the bank. This is a great way to access the huge capital that you may need to run your business.
• Angel investor
An angel investor is someone who has a lot of money and is willing to invest in startups they believe in. Such investors usually hold meetings to go over business proposals so they can decide which to invest in. Additionally, they provide mentorship to guide your business to success.
• Venture capital investor
A venture capital investor, on the other hand, is someone with a large amount of capital for funding your business. But unlike angel investors, they look for other investments once there is an acquisition or IPO. This usually takes about three to five years.
• Business incubators and accelerators
Business incubators and accelerators are great for young entrepreneurs who are looking for funding, mentorship, and networking. Generally, incubators nurture and help your business grow steadily, while accelerators, as the name suggests, fast-track startups.