10 Proven Ways To Raise Fund For Your Startup
As an entrepreneur, there is an undying enthusiasm to build startups that will solve problems in the society. One of the biggest setback to the realisation of this vision is the unavailability of funds.
As a matter of fact, fund raising is predominantly the chief worry of startups. Founders often spend more time sourcing for seed rounds than they spend on other issues that partains to their startups.
These are proven sources of funds for your startup.
1. Non-Dilutive Capital:
Non-dilutive capital refers to funds that don’t require the sales of your startup’s shares or dilution of the shares of existing shareholders. The best source of this kind of funds are entrepreneurship foundations that are existent in most countries.
There are lots of non-profit organizations that give free grants ranging from $5,000 to infinity. Accessing such grants means you need to be aware of their existence and you need to produce documented proofs of the viability of your startup’s idea.
2. Angel Investor
An angel investor is a successful entrepreneur who has made so much money that he can afford to diversify by investing in new startups. They get convertible bond or startup’s equity in exchange for the capital injected into the startup.
Funding from angel investors is pretty easy as long as the startup owner can convince the investor of the viability of the startup. An example is Mark Zuckerberg’s $24million investment in Andela, a startup that is dedicated to the training of young tech savvy entrepreneurs.
Building a startup is obviously demanding and costs a lot financially and otherwise. It requires a large chunk of time and dedication. You certainly don’t want to go hungry while looking for investors.
A sure way of funding your startup is to get a side job or gig while you nurse and plan towards your vision. You can have a day job, while you dedicate your night to your startup and also push some of your salaries or wages to it.
4. Venture Capital
A venture capitalist takes high risks by injecting seed rounds into startups. A venture capital is seed capital from venture capital firms or funds in exchange for equity in the startup. One must ensure that he has his negotiations right when getting venture capital. You certainly don’t want to erroneously lose a large chunk of your company’s equity, do you?
4. Business Partners
You’ve got the idea, someone else has the cash. Bring him in. Business partners are sure sources of funds. They are not just financiers but also stress-partners, hustle-partners, managemtnt-partners and co-founders. This means you’ve got their backs to lean on when things go south.
Utmost care must be taken when choosing partners, because one’s team is crucial to the survival of a startup.
Commercial banks, banks of agriculture, banks of technology and banks of industry, gives out low interest loans to entrepreneurs in dedicated industries. The policy for loan acquisition differs from countries to countries. Most often than not, loans are easily made available to entrepreneurs that are investing in choice sectors that are dear to the heart of the government.
6. Government Entrepreneurship Funds
Apart from banks of industry, the government of most nations have direct influence on the entrepreneurship growth of their citizens. They offer grants and zero-interest loans through various entrepreneurship programs. Most times, these funds are not accessed annually because people are barely aware of them. Make use of Google and you will be glad you did.
7. Piggy Bank
Don’t tell me you didn’t have one when you were a kid. If you did have, it’s time to break it and get all the gold coins in it. Don’t get lost – I’m talking about your personal savings over the years. Most people will be reluctant to invest a dollar bill into your startup if you don’t have any savings that you’ve injected into it already.
Heard of Kickstarter? Look it up. Crowdfunding basically means funding your startup from money donated by a large community of people best known as crowd. Why will a community decide to invest thousands and millions of dollars into your startup? Well, the answer is simple. They believe in the startup you’ll be building because you’ve given them the assurance that it will work. Also, they want to be the first to try out your product or service when it launches.
Saving costs and time is key. There is no need to rent a big office when you’re still starting. You can share an office space with another startup or use a section of your apartment as an office. Why hire a redundant secretary and pay her monthly salaries when you can contract freelancers to tidy your important secretarial gigs for you.
The idea of bootstrapping is channeling funds from seemingly unimportant things to things that matters.
10. Family And Friends
I guess everyone knows this already – charity begins at home. Same for investments. Why go out in search of loans and grants from people you barely know when you’ve not shared your vision with the people you can trust? In all things, home remains a safe haven. You can raise low or zero-interest loans (and grants) from family and friends. Give it a try before you check outside.