How to fund your start up
As we all know, becoming an entrepreneur is a daunting and a will testing journey, and in most cases the pitfalls are related to finances. However, in today’s technology fuelled society, start up companies have a number of creative solutions of raising cash available at their fingertips.
- Self Fund
This may sound really obvious but it is often one of the most overlooked solutions. This approach is normally referred to as “bootstrapping”. We live in a world where the cost of building a business is at an all-time low, in fact Business Insider reports that 90% of all start-ups are self funded. The greatest advantage of this is probably not having to give away any equity and debts.
There are other advantages too, investors like seeing your commitment to a venture, and nothing says committed than using your own resources.
Work an extra part-time job, cut your Netflix membership, re-invest the revenue generated from your business – do whatever It takes to have that little a bit of extra cash to fuel your growth.
2. Crowd Funding
This is one of the newest sources of funding available to anyone who has a laptop… or PC if you’re stuck in the 90’s. Kick-starter, Indiegogo are some of few examples of great platforms you can use today to make online pledges to fund your start up business. In order to launch a great campaign however, the content has to be of great value. A widely used technique is posting a simple, yet creative video detailing what your company does and its importance in its industry. The biggest factor that makes people want to contribute is usually the WHY, but instead of simply saying “we need the money because”, rather show the USP of your start up and what problems it looks to resolve, that in turn will answer the WHY for potential donors.
3. Government Loans and Grants.
There are a number government grants available to support new businesses and options tend to be greater for businesses that support great causes e.g. medicine and education. A great place to start is visiting www.gov.uk/ business-finance-support-finder/search
Here you can look through 533 available schemes and pick the one most applicable to your business. Again, this process may happen over a long period of time but it doesn’t cost you any equity.
Partners can be a very valuable asset, in not only idea sharing and business development, however, they can also be a great source of funding. It is advised to align your business with strategic partners that compliment your services/products as they could eventually feed your business.
5. Venture Capital
Start ups experiencing high growth normally require large investments to keep the momentum going and venture capital is a common method of raising the funds. However it is important to note that these firms typically look to invest large sums in exchange for a significant share of the company.