Best Startup
For many startups trying to grow and grab market share, getting some kind of funding is sometimes one of the only ways to get any traction.
Whilst using your own personal savings is always ideal, this may not be enough when you consider the cost of legal work, web or app development and ongoing marketing.
It is common knowledge that tech-based start-ups are able to attract attention from angel investors and venture capitalists. However, the market is becoming crowded and thus, finding investment is a hard task and you need to demonstrate a very strong business plan.
This article will outline a number of realistic ways that can be sought after to fund your start-up idea.
1. Trading services and equity
It is always a good idea to make use of both professional and personal connections when it comes to help. This in fact does not necessarily apply to money, but services that help you to avoid paying more. For instance, there may be local graphic design freelancer looking to build their portfolio in exchange for your own services.
Not everyone will be willing to do this, and while it is certainly important to not rely on this, it can be a helpful stepping stone to help in attracting attention from investors eventually.
2. Friends and family
Borrowing money from those closest to you may not sound like fresh advice. However, this is a tried and tested method by even the most successful of startups including the likes of Apple, Facebook and even Amazon.
Borrowing money from family and friends through loans can turn sour if the appropriate measures are not taken. It is important to be careful and manage expectations on repayments and timelines to ensure good growth of the business and maintain healthy relationships.
If you are going down this route, you should look at Government Enterprise Schemes such as SEIS and EIS since there are some great tax breaks for people who invest in startups and your friends and family can benefit from this too.
3. Using own funds
While again, this may sound like an obvious option, it is still wholly important. This refers to essentially using your own personal savings to fund your business.
Before taking too much out of your own pockets, you should make use of soft credit checks online. This will help you to figure out whether you can take out any personal loans, as well as what interest rate you might pay on these.
4. Accelerators and incubators
Accelerators and incubators are essentially part communal workplaces and part mentorship development centres. They can allow for great partnerships to ensure, as well as build on important connections for both the present and future.
It is important to note that they are typically very heavily revolved around tech so they might not be for some start-ups.
5. Personal or business loan
Traditionally you would go to your local bank branch to ask for money to start a business, clearly showing your financials and plans for growing a business. Whilst this was extremely common, it is very rare today and buddying entrepreneurs are more likely to go to private lenders online or challenger banks for some startup money or seed funding.
Often you need to be in profit or revenue generating, with some lenders requiring you to be active for at least 2 years. But if you can secure some kind of funding, this can give you a cash advance upfront to get things going and often the flexibility to repay over several months or years.
6. Crowdfunding
Crowdfunding is a great option for those with a popular idea and savvy at social media. Crowdfunding often spreads through social platforms such as CrowdFunder, Seedrs and Indiegogo. For this to be successful, a lot of buzz needs to be generated as it is so popular and often you give away a small stake to investors and they get added benefits such as free t-shirts or prototypes of the product.
