Eleven Methods to Get Funding for Startups
How to get funding for a startup, has been a difficult question to ask all the time. Many people want to make their brilliant ideas into real startups and great businesses. However, lack of funding is the most prevalent problem at the early steps of launching a startup. In general, economic difficulties are one of the initial challenges in entrepreneurship. There are lots of ideas that can make life easier for people or completely change the world. Still, unfortunately, they gone disappeared and never be started, just because their founder does not have enough money even to make a minimum viable product (MVP). If you have found something in common between yourself and these sentences, we will introduce some of the most common ways to raise money and get funding for your startup.
1. Try to be dependent on yourself
Self-funding is a critical point in starting a new business. It is also known as bootstrapping. Entrepreneurship is not easy at all, and when becoming responsible for financial resources that you got from other peoples such as sponsors and investors, the situation turns to be more complicated. Remember that most of the startups (about 94%) fail within their first years, so to stay away from extra troubles, it will be more reasonable to start as small as you can with the minimum financial commitments.
If you still do not have enough money to start the first steps, be patient. Start or continue to work for others from 9 to 5, and earn the required cash while you keep improving your idea and adding more unique values and unfair advantages to it.
2. Friends are the family we choose
One of the times that real friends can help is when you want to get funding for your startup. If you’re not shy, and more important, depend on your relationships, it can be a good idea to ask your family and friends for some financial support in implementing your business idea.
Getting fund in this way may have some extra advantages:
First, become indebted for the kindness of people who love you is more comfortable to have a signed official contract with some investors who calculate and consider each coin they spent on your idea. Second, these kinds of support can push you to become more committed and energetic in achieving your goals and be passionate about making your dreams come true.
3. Crowdfunding is an efficient solution
In a few words, crowdfunding enables you to get funding for a startup quickly within a short amount of time. In a crowdfunding platform, projects achieve the level of financial support (money) they need by raising small amounts of funds from a significant number of interested people, typically via the websites.
This is how crowdfunding works – first, you should provide a complete description of the idea, including your financial goals, potential revenues, how much investment you need, etc. in a crowdfunding platform. Then, potential investors read different projects’ stories and give money or donation to more exciting projects based on their beliefs.
Kickstarter is an excellent example of a well known global crowdfunding platform to get funding for a startup. There are various types of projects in Kickstarter, ranging from valuable life-saving projects to simple delivery startups. Kickstarter has raised more than $4 billion over the past decade and successfully attracted more than 16.3 million investors to fund 445,000 projects.
To become more familiar with Kickstarter, check their website:
4. Incubators and startup accelerators
Incubators and accelerators are popular terms in the startup ecosystem, which individuals sometimes use them interchangeably as synonyms, while it is not correct.
If you have an idea and want to launch a startup from scratch, incubators will fund and support you to pass the fundamental steps. On the other hand, accelerators, also known as seed accelerators or startup accelerators, help small companies and business to accelerate and scale-up.
Nowadays, lots of universities have their startup accelerators and innovation center. These centers provide unique valuable opportunities such as mentorships, educational and practical workshops, etc. especially for university students to run their startups.
Y Combinator (YC) is one of the most well-known seed money startup accelerator located in the United States. The company was founded in 2005 and until now has helped to launch over 2,000 firms such as the Dropbox and Twitch.
If you are looking for something similar to the Silicon Vally in Europ, Station F in France is the answer. European entrepreneurs can join Station F in Paris, known as the world’s largest startup facility. Station F, with more than 30 startup programs, located in a former train station built in 1929, which previously known as la Halle Freyssinet. To visit this amazing place and find more details about its programs, check the below link:
5. Angel investors
Angel investors are typically wealthy people who have extra financial resources and are searching for investment opportunities that would provide a higher return rate than typical investments. Angel investors accept the risks and invest in new or small startups. However, investors usually get some debt, stocks, or ownership equity in exchange for their investment.
6. Venture capital
Venture Capitalists (VC), also known as Venture investors, usually are companies or individuals who use other great companies’ money for investment. There is no considerable difference between angel investors and venture capitals in the subject of “how to get funding for startup”; if you have a worthful and expensive idea, it may be better to find venture capital. However, VCs will rarely get involved in new startups.
7. Get funding for your startup from competitions
There are lots of competitions such as startup weekends, where you can participate and earn some money to begin your story. Moreover, these kinds of events are an appropriate place to improve your network by meeting experts, people who are looking for jobs, other startup founders, etc.
In general, a startup weekend is three days (54 hours in total) weekend competition, with about 60 to 120 participants. People who have ideas. If you want to become more familiar with Kickstarter, check the below website:
8. Use bank loans to get the money you need
Typically, banks are the first place when entrepreneurs choose when they need financial help. However, most of the banks expect loan borrowers to put up something such as deposit, their home, or any other kind of valuable property. So bank loans would not be a good option for those entrepreneurs who want to start their first business and do not have important belongings.
9. Governmental programs for investing in startups
Although governmental grants are not easy to win, and there are mandatory requirements and qualifications, if you have a considerable idea to run a startup, you can apply for some governmental programs specifically for investing in startups.
Small Business Innovation Research (SBIR)
For those who plan to run a startup in the field of research and development, SBIR can be considered as a special offer. Small Business Innovation Research (SBIR) is a program supports by the United States government, proposed to assist small businesses, focused on research and development (R&D). To achieve more information about the SBIR you can check their website:
Small Business Technology Transfer (STTR)
Startups that focused on technology can apply for the Small Business Technology Transfer program, which is similar to the SBIR but intended to help tech-based startups. The below link can be used to apply for the STTR program.
WomensNet, The Amber Grant
Here is good news for you if you are a woman who wants to run a small business or a startup. The Amber Grants from WomensNet made a brilliant opportunity for women-owned businesses.
People can apply for the monthly competition and try their chance to win a $1,000 grant. Eligible monthly winners can participate for a $10,000 grant program. Furthermore, there is also a grand prize at the end of the year, which makes The Amber Grant more interesting. Detailed information can be accessed through the below link:
You’re just a search away from reaching related programs in your country.
10. Pre-selling products and services
You can get the money you need by pre-selling your product even before they come out. However, it may be too risky because, after pre-selling, you will have some customers that may have some unachievable expectations from you (your brand) and your company. Pre-selling can be more beneficial for those who are well known enough in their fields that customers can trust them.
11. Selling some unnecessary assets
Last but not least is an old way to get the money you need temporarily. Valuable properties and assets such as cars, jewelry, etc., can be appropriate options to achieve the funding you need for a startup. However, selling assets is an entirely personal idea. There is a risk that your startup fails, and you can never buy the sold assets again.
Conclusion and next steps
Running a startup is not easy at all, and in this way, get funding for a startup is one of the most critical fundamental steps. However, there are some common ways for founders to achieve the amount of money they need. In this article, we introduced eleven of these ways and discussed their pros and cons.