Getting a Startup funded is a big task and not an easy one! You are a small fish in the large businesses with some innovative idea, and you need money. You are optimistic about the idea being successful, and the investors need to get convinced about it. You can use money from your savings, or you can get external investments or loans. Let us see some ways to get your Startup funded in 2017. You can find freelancers to work with you at the initial stage as cost saving is as important as revenue.
Bootstrapping or Bootstrap Funding:
The Bootstrapping concept is related to starting a business without external help or capital. These Startups fund their company through internal cash flow and are cautious with their expenses. It is one of the best ways to start a business with the small amount of money.
The Pros and Cons of Bootstrapping:
When you bootstrap, you retain 100% of your company without any shareholders or someone sharing profits. It gives you complete control over your start-up’s mission, product, and team.
Bootstrapping also keeps you scrappy. As you don’t have the luxury of spending a single extra cent, you’re forced to pay minute attention to your costs. You’ll become as efficient and resourceful as possible to make best use of available resources. If you can achieve profitability on your own, not only will you have proven traction, but investors will be able to get in later without the standard dilution.
Let’s say you’ve got a unique product idea. If you decide to bootstrap, it takes you half a year to go to market. Within that span, if more companies enter the space with similar products, you lose your competitive advantage.
You may have a great product idea that will generate a lot of revenue in future but not before investing a ton of money. Companies in this category include Facebook, Snapchat, Dropbox, and Evernote. This kind of ideas need large investments, and it can only come through Venture Capitalist firms.
The Startups that should seek VC money are in tech and new or emerging industries. VC funding also comes with another advantage. If you are facing some problems and need advice from someone who’s likely dealt with tens or even hundreds of companies, the investors are always ready to help as it is in their best interest to help you. If you need connections to other influential people, they can make the intro or at least give you some insight. A well-respected VC backing you does enormous things for your credibility.
It is a trend that has taken off globally over the last decade. It is becoming a viable source of funding small businesses and being already used in social cause Startups. Alongside the international leaders in crowdfunding a whole lot of dedicated Indian platforms now also exist ready to support the latest Startup ideas across a range of industries.
You should not close the doors for Angel investors if you truly want your business to take off. Angel investors can be anyone like friends, family, and mutual connections who can invest in your Startup for equity. Since this type of investor focuses more on the entrepreneur, you need to have a deliberate approach and adopt the expected qualities.
Consider Bridging Loans:
In case, your business requires a physical place to operate; then you have a few financing options to consider. Apart from traditional lenders like a local bank, you can also seek bridge financing solutions to secure the money you need. They are possible from banks, financial institutes, and financial organisations like cooperative societies. They are a stop-gap arrangement till you get major funding.
These loans help freelancing businesses afford much-needed office space for sustained growth. The approval is faster than traditional loans, but they need some form of collateral. You can get more information in the freelance tips on freelancing marketplaces.
Many entrepreneurs choose to skip the process of raising outside funds, and they take advantage of a home equity line of credit or a reverse mortgage. It eliminates the necessity to pitch to VC’s and other experienced investors, and you’re funding a speculative business with a form of financing that requires consistent, monthly payments. The bank doesn’t care about your business. In turbulent times, the bank will add increased stress for the payments you can’t afford. Your home can raise money for you in need, but you have to compare the interest rates before selecting this option.
Conversations with likely investors
Whatever is your first step to start your business, when you have a list of customers, services or products, it is the time to look for investors. You need to have some tracking sheet to show you are continuously making progress and if you take investments at this stage, you can make better use of it for generating momentum for your deal.
An Important Factor – Settle Your Debts
Throughout your journey to fund your business, you will come across many investors who’ll investigate your own finances before they invest any cash. If you want to attract investors, you need to assure them that their money is safe in your hands. You need to clear your debts and show that you in control of your finances and can use the investor’s money in a way to boost the business.
The best way is to use to your money and maximise the returns, but that will not always be possible. There are pros and cons for every type of funding, where your funding is the best way with limitations as per individual savings. If you decide to go with Angel investors or VC funding, you should be ready to part away with some equity as well as you may have to pay interest on investment. The freelance work and cost saving are important considerations. Crowd-funding or micro-finance can be used for small or social causes and select the right funding method will have a great impact on your Startup.