Any startup is incomplete without considerable funding. Right funding makes the backbone of any company. But don’t think that only funding will take your startup to heights. You will be required to put every single bit of your to grow your business.
As per a researched report, the percentage of the businesses failing in the very first year of their startup is staggering. Nearly 94 percent of startup fails in no time and funding remains one of the core issues for the same. Therefore, today I will be talking about funding methods that will help you to support your business model accordingly.
Following is the graph that highlights the growth in different industry startup funding worldwide between 2012 and 2017. The top industry which has been heavily funded in the recent years remains the Blockchain startups, whose funding grew by 1,321 percent between 2012 and 2017.
If you talk about initial funding for the startup, the first thing that matters is the nature and type of the business you want to pursue. You can clearly see in the graph that various business models have different funding inputs. So, once you make up your mind about your startup, you can start thinking of options that will help you to get the required funds.
Let’s get started and explore the options of funding that will help you to get going with your startup plans. Before that, I would like to mention that all the funding options mentioned below may not be available in every region of the globe. Thus before jumping to any conclusion, make sure to confirm the policies related to the given funding options in your country.
Before thinking of funding options, make sure that your business blueprint is viable and requires the said funds as calculated. You might give a thought to reevaluate the startup costs. Because it’s a startup, you can consider work from home type plan, where you can get your team to your place and you people can kick-start your project. It will definitely save you from the brunt of office expenses. This way, you can save a lot of initial funds.
Or if you are adamant on your startup plans, you can think of some other alternatives for amass initial funding. Like, you can offer your startup business services instead of paying in cash. This trick will surely help you to save a lot.
In other words, you can term it as self-funding. Bootstrapping is one of the primary and most comfortable ways of raising funds for your business. Nobody knows the future of any business plan, and due to this, a startup always finds it hard to raise funds for the on-ground activities. So, it’s still great to invest your own savings, and you can even ask for a short-term loan from your family and friends.
Bootstrapping has many other advantages also like you don’t have to repay the initial investment, and if your family and friends have helped you, there is always ample time to pay them back. The next advantage is, you don’t have to answer back to the investors if your business fails (which I hope never happens).
As the word itself describes, the person who is willing to fund your startup plan would be no less than an angel for you. Angel investors are those people who have an extra set of cash to fund business models and expect some lucrative returns from such investment.
If you think that it sounds impractical, you can have a look at companies like Google, Alibaba, and Yahoo; these all companies got their initial dues from angel investors. So, now you can well make out the feasibility of this kind of funding.
Though there are downsides to such funding also. One of the significant issues remains the total investment. There can be a single person being an angel investor or a small group of people. Therefore, the funding always comes in low volume and doesn’t suit the need of startup which requires massive funding from the very starting.
Then comes the banks. An established and recognized bank will always be up for giving you funds for your startup; the only condition is that your blueprint about your startup should be convincing enough. So, if you are disappointed by the angel investor, the bank will be your savior.
The banks always have the leverage of pumping out massive funding, but that also depends on two types of financing options. One is funding, and the other is working capital loan. In the funding option, the bank will look into your business plan and evaluate the total loan. And in a working capital loan, the loan is more towards covering the finance that the company will spend on the everyday operations like accounts payable, wages, and more.
So, you need to make up your mind about the type of funding before going for a bank loan.
Now, this is the real bet that many of you must be looking after. Venture capital funding is usually extended by the private equity firms that offer massive funding for startups and emerging firms. The only factor to grab such a deal is to have high growth potential. Mostly, it’s witnessed in the acquisition or IPOs (Initial public offering).
The venture capitalist not only invests in the company but also acts as a mentor who offers their valuable inputs in guiding the business plans after they fund the business models.
The only disadvantage that comes with the venture capital is their time to recover their investment, which is very short as compared to other methods of fundraising and doesn’t go well with many of the startup houses.
Crowdfunding is one of the latest ways to raise funds for a startup, but sadly, it is also not too reliable. There are different websites where you need to register your startup plan, and if people think that your idea is worth their money, you will get a tremendous result.
One such example is of Oculus Rift, a VR technology company. Its founders started its crowdfunding campaign in 2012 with a goal of raising $250,000. Thanks to their startup idea, the company was able to garner $2.4 million. Later on, the company did so well that the Facebook bought it for $2 billion.
Now, you can well imagine what miracles crowdfunding can do.
If you are a startup and thinking of going big, you do require funding and if you are wealthy enough to start on your own, good enough, but if you need to raise funds for your startup, go on with any one of the ways mentioned in this article and my good luck are always with you.
Go out and dream big, who knows, you may see yourself in the list of top youngest billionaires of the decade or the best startup house of the year.
A typical boy and tech enthusiast, Vikram is totally fascinated by the journey of his day from miseries to joys. Covering the journalism field, he writes at MobileAppDaily and keeps surfing the trends to understand tech and inventions better. Don’t forget his driving skills, he is a professional car rallyist. Life has just got better, breath it!!Follow