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How to Fund Your Startup in Early Stage

It’s not always easy to raise the money required during the early stages of a startup. Here are tried-and-tested ways on how to do fund your early-stage startup.

You are here: Home / Financing / How to Fund Your Startup in Early Stage

April 24, 2020 //  by Jim Hughes

A business begins with a single spark. An idea that must be fostered and developed. It requires two types of nourishment: first, a lot of brainstorming; and second, the funds to get it started. Brainstorming and idea development can be done for free. The problem is, it’s not always easy to raise the money required during the early stages of a startup. That’s why, in this article, we’d like to share with you tried-and-tested ways on how to do just that. Here they are:

Take out a loan.

If you want a faster solution, then you can always take out a loan. There are cash advance and other online loan options that you can apply for. Some of them even guarantee loan approval after just 24-hours. Be aware, though, that a lot of them come with high-interest rates and not-so-flexible payment terms.

Ask help from your personal network.

Let’s face it. Banks and other financial institutions may not be always on board with your vision. At least, not as much as the friends and family who believe in you. Hence, that line of option is something that you should consider as well. You can either borrow money or invite them to become an investor in your company. 

Apply for a small business grant.

There are different government offices, non-profit organizations, and financial institutions that offer programs to help small business owners get started on their ventures. We recommend performing your own research and applying for all the programs that you are eligible for. It can take quite a while for one to get approved, though, due to the high volume of applications they receive each month, and you need a solid business plan for them to review.

Here’s a pro tip: If you do choose to go this route, it can help to have legal documents in place. This will help you manage your arrangements later on, and even salvage your relationship when things start to go sour.

Trade services or equity with an established business for help.

If you believe that putting your relationships at risk over your business idea is not worth it, then you can consider getting help from a potential partner instead. For instance, you can barter free copywriting services in exchange for use of office space. Or you can trade equity for the use of office equipment and resources. The challenge here is to overcome your fear of rejection. You’ll be surprised how many business owners out there are perfectly fine with this setup. 

Seek out a startup incubator.

Startup incubators are facilities funded by non-profit organizations and private companies with the objective of helping out new business owners. They usually offer free office space and use of equipment. However, some of them offer seed funding as well. They are usually found near universities, particularly those that offer business programs, but they can be located elsewhere as well. 

We recommend finding one that favors your chosen industry, though. There are a lot of startup incubators that primarily favor tech-related ventures. There are startup incubators in New York City that favor food and fashion businesses to complement the culture of the location. And of course, there are all-around incubators that accept any promising business regardless of its industry.

Get noticed by an angel investor. 

An angel investor is a high net-worth individual seeking to help launch high-potential business ideas off the ground in return for a decent profit. The best thing about angel investors is that they understand the struggle of a new business owner. After all, they’ve been in your place once. In fact, that’s why most of them became an angel investor in the first place. They are very selective about their investments, though. So be sure to choose an angel investor whom you believe can easily relate to your vision. 

Get the help of a venture capitalist. 

It is a firm specifically dedicated to funding startups in their early stages. If angel investors seek to make a decent profit, venture capitalists, on the other hand, look forward to getting their money back, earning a profit, and then some. The good news is, they offer a higher fund allowance (sometimes up to a million dollars) compared to the other institutions we have mentioned here. They are also very selective in their startups, usually favoring software and other tech-related ventures. If you do get initially approved, though, just take your time reading the contract before you sign anything. While handing out a share of your company is not always bad, it’s definitely better if you were aware of it the entire time.

Launch a crowdfunding campaign. 

Do you have a digital marketing prowess? Is your idea something that most people would find awesome? If you’ve answered yes to both questions, then you should definitely consider launching a crowdfunding campaign. 

Crowdfunding is a digital platform that presents your ideas to people willing to donate small amounts of money to turn your dream into a reality. The money is then pooled together and voila! You might have enough to launch your startup by the end of your campaign. Just choose your crowdfunding platform carefully. 

You see, there are platforms that only allow you to withdraw your money once you hit your target donation goal. The good news is, these are usually platforms with a wider reach of active users. On the other hand, there are slightly less popular platforms that allow you to withdraw whatever amount you have raised in your campaign. 

Conclusion

In the end, it will all boil down to what you think is best for your business’ needs and personal preferences. Starting a business and witnessing an idea turn into a reality especially in its early stages is definitely a magical and exhilarating feeling, but it’s certainly not cheap. Hopefully, by considering the suggestions that we have shared with you above, you will be able to find a way to get the necessary funds that you require without compromising your vision and ultimately seeing it reach success. Good luck!

Similar Posts:

  • 40 Tips on How to Use Crowdfunding to Raise Money for Your Business
  • How to Attract Angel Investors
  • How to Get Free Grants for Starting a Business?
  • 5 Ways to Retain Talent in Your Startup Business
  • Avoid These 10 Common Mistakes When Seeking Financing

Filed Under: Financing Tagged With: Financing a Startup

About Jim Hughes

Jim Hughes is a content marketer who has significant experience covering technology, finance, economics, and business topics for about 3 years. At the moment he works as content manager in OpenCashAdvance.com.

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