December 23, 2020 Last updated December 23rd, 2020 151 Reads share

How to Raise Capital for Your Startup

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These days, anyone can build a startup from scratch. However, the process isn’t easy, and it involves several challenges. One of these is raising the right amount of resources in order to launch your startup.  Many young and first-time startup founders struggle with financing their business concepts. Money doesn’t grow on trees and you need to look for the right funding sources before getting started. The good news is you won’t have to look far in order to get your startup funded. There are numerous options to look at if you are strapped for cash but you need to finance your business:

Ask for Cash Within Your Circle

The first place you can ask for cash is your inner circle. This comprises relatives and close friends who won’t hesitate to lend you some money with the prospect of getting paid back in dividends or partnership deals. You may have reservations with this, but it’s important to think about the potential returns of your business ideas once it catches on. With that being said, try to pitch your idea to your inner circle. You would be lucky enough to secure enough cash to build your startup.

Save Some of Your Salary

If you are currently employed, you can set aside a portion of your monthly paycheck for financing your startup. However, this might take time especially if you are working at an entry-level job. With some persistence, setting aside at least 20% of your salary should pay off in the long run. 

Tap Government-Sponsored Grants

The government is always looking for concepts that have a huge potential to make an impact in society. Especially if you are involved in sustainable innovation and community development, you can seek out grants from institutions such as the US Department of Agriculture and Small Business Administration. The only catch is that there is a lot of competition involved in the selection process. To qualify for a grant, you will need to follow stringent requirements, including a compelling grant proposal. You might need the help of a professional grant writer to help you with your application. Once you get that settled, you could earn enough money to cover everything, from planning to execution.

Apply for a Loan You Can Afford

While considered as a traditional approach to funding a business, applying for a loan hasn’t lost its popularity, even among young entrepreneurs. Unlike applying for government grants, getting a loan only has a few parameters. Although you are required to disclose your income sources and credit record, borrowing money provides you with the flexibility you need to get the ball rolling. You have numerous loan options to choose from depending on your financial situation. You can apply for personal loans, microloans, and even car and RV title loans if you have a bad credit score and are willing to present your vehicle’s title as collateral.

Get Crowdfunded

Another way you can access funding without hassle is through crowdfunding. Platforms like Patreon and Kickstarter are just some of the best places to attract people who are willing to invest in your idea. Whether you are developing an innovative video game or creating a new tool that will help farmers increase their yields, you can get people to contribute to your startup. However, your success with crowdfunding will depend on how well you pitch your idea to interested donors. One strategy you can utilize is to give out rewards relative to the amount they give. 

Contact VCs and Angel Investors

Venture capitalists and angel investors are people or firms that are looking for potentially profitable businesses to invest in. While both terms are often used interchangeably, there is a big difference between VCs and angel funding. A VC invests in your startup with the expectation that it would be able to become a majority shareholder or totally buy the startup from you once it matures. On the other hand, angel investors are more focused on helping small businesses grow. In return, they get to be paid relative to their stake in the company. There is no such thing as a free lunch, but tapping VCs and angel investors gives you access to large pools of capital. Still, you need to hone your startup pitch so you can secure the resources you need.

Financing a startup doesn’t require a lot of money. You just need to leverage every available means to fund your business and drive its growth. Keep these tips in mind while trying to get your business off the ground.

Crowdfunding -DepositPhotos

Samantha Black

Samantha Black

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