Funding for your business is as important as your idea. If you want to run a successful business in the long run, proper capitalization is one of the basic requirement. So, it becomes the primary concern for an entrepreneur how to raise finance for their startup?
Getting finance for your business depends on various factors such as the nature of the business, the location of the business, business idea, and many more. The write-up below will guide you with different ways of raising funds for your startup.
Self Funding Or Bootstrapping :
When you are at an early stage of your startup, you might find it difficult to get the funding. The, best possible way to support your business initially is bootstrapping. Investing your own money in your business can be a good support in the starting stage.
Later, after a certain course of profit or successful running of your business, you can get investors to monetize. It will be far easy for you to get funding then. But bootstrapping can be taken into account only for small businesses. Make sure you don’t end up getting too many credit cards and going knee-deep debt.
Raising Venture Capital
Venture Capital is the fund provided by venture capitalists who invest in a startup keeping in mind the potential of the business. They not only support with funding but also provide you with the guidance and mentorship to test your business. You can evaluate the sustainability and scalability of your business.
Such type of funding can be raised for an IPO or acquisition or when your business is already running profitably for quite some time. Though it involves huge risk for investors as they provide funds based on trust. Venture capitalists look forward to investing in big companies and ideas already generating revenues.
Crowdfunding is the latest trend to generate funds for your business. Rather than raising funds from an individual, you can take money from a group of people. Crowdfunding can be raised for the business that has gained popularity in short-term.
There are various online crowdfunding portals that are highly useful to get loans and investments for your business. There are many influential Crowdfunding Backers willing to invest. Just you need to present your idea in the most attractive way focussing on its benefits.
Startup angels or Angel investor refer to the individual who wants to invest their money in good business ideas. Along with funds, they may also provide guidelines for the successful running of a business.
In the initial stages, renowned companies like Alibaba and Google were also supported by Angel investors. They risk the investment in expectation to higher return. They expect a certain percentage of the equity in the business.
Incubators And Accelerators:
Nowadays, Incubators and Accelerators are found in almost all the big cities. Incubators are the ones who help you in startup and setting up of your business, while accelerators help you with running your business successfully.
Incubators support you with initial requirements like mentorship, equipment, training, and networking while accelerators help you to grow and nurture. They provide financial support for a very limited time period. The time period may be as short as three to four months. There are various advantages to raise funds from incubators and accelerators. You get to learn new things, develop connections and get to work with different startups of similar interests.
The write-up below completely guides you with different ways to get initial investments for your business. So, do not just think and sit. Give life to your business ideas, you can get the wings in the form of finance through different possible ways.