DELICIOUS
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REDDITHaving a great business idea is only half the puzzle—you need the ability to sell the idea to others and money to finance it.
Tech startups have traditionally gone down the venture capitalist and angel investor route, but this is becoming saturated and there are other methods.
Let’s take a closer look at 6 of the best ways to fund your startup …
1) Loans
A common option to fund your new business is to borrow the money. Many banks will offer loan packages designed specifically for small businesses and there’s not necessarily anything stopping you from using a personal loan either.
The downside is that banks can make it quite difficult to qualify and won’t always give you all the money you want or the best terms. If you have poor credit, forget about it.
It’s not just banks, however, that provide loans. There are smaller lending companies that use storefronts and websites. There are also a growing number of online alternatives using a Peer-to-Peer platform where pools of individuals lend the money instead of larger institutions.
Whatever you choose, keep a close eye on the interest rate, duration of the loan and small print. You are obviously going to have to pay it back and a loan with a rate that’s too high or that needs to be paid back too quickly could do more harm than good.
2) Crowdfunding
Instead of selling yourself to pockets of seasoned investors, the internet now allows you to sell yourself to a much larger pool of investors and individuals via crowdfunding.
Join one of the leading crowdfunding platforms, pitch your idea, and virtually anyone around the world can pledge their support.
It is up to you what you offer supporters in return. This can range from their name being publicly thanked in some way to receiving the finished product as soon as it’s developed. You will need to come up with a model that’s profitable for your specific idea.
The main benefit of crowdfunding is your ability to reach people who normally would never have known about your idea.
3) Trade Services
The money you raise to fund your startup obviously partly goes towards paying for materials, services and other professionals to develop your idea into something tangible.
If you yourself have marketable skills or can otherwise provide services to others, why not do a trade?
For example, promise to code somebody’s website if they will help design your logos.
In most major cities there are communities of professionals and budding entrepreneurs that work together to help each other succeed.
While this isn’t a long-term route to success (we live in a capitalist system after all), trading services can help in the very beginning and is a good addition to other funding sources.
4) Bootstrapping
Bootstrapping is clever startup speak for funding your business yourself and is often associated with those that freelance or provide services while trying to get their idea off the ground.
If you are a professional or have marketable skills you can easily sell your services online as a freelancer, giving you time and at least some money to fund your project.
The term can also refer to those that go all out, using credit cards, home equity loans, and virtually any self-acquired source of funding to give their startup a chance.
Sticking to your regular day job is also an option and reduces the risk of messing up your personal finances, but the downside is that you won’t have a lot of time to focus on developing the business if you’re stuck in a 9 to 5.
5) Incubators and Accelerators
Business incubators and accelerators are co-working spaces and mentorship programs that help startups in the community acquire funding but also expertise and services.
They are often associated with colleges, private business groups or are funded by the government.
In essence, they give you support, but you still need to sell your idea and yourself to get that support.
6) Grants
The Small Business Administration and other government or private groups sometimes offer grants to small startups run by women, minorities, or veterans, or business ideas that meet certain criteria (i.e. a business that they believe will help the local community).
This is by no means an exhaustive list of funding methods, but they are the most widely available options for most people.
Are you launching a startup or have successful businesses already under your belt? Let us know how you got funding in the comments below!
