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Getting Your Idea Off the Ground: 8 Ways to Get StartUp Funding

Of all United States billionaires, more than 62 percent are self-made. And the right business can turn into life-changing capital.

But it’s not always easy to know how to fund a business.

stages of startup funding

Fret no longer. We’re here to make the first step of setting up a new business simple. We’ve picked out the eight ways to get startup funding to launch into a new career.

The Changing Landscape of Startup Funding

In the past, there weren’t always many options when it came to finding business startup funding. But technology has changed the funding landscape drastically in recent years.

Advanced communication makes it easier to link up business hopefuls with investors.

But not all new businesses are taking advantage of the resources out there. According to financial surveys, as much as 65 percent of new business owners are not sure they have enough money to get going.

why business fail

Here are eight ways to buck this trend and pull in startup funding:

1. Crowdfunding

Technology has made it easy for new entrepreneurs to connect with business startup funding. And crowdfunding is the prime example.

Crowdfunding uses online social platforms. New business owners can post their financial needs or issues.

People who want to see the business or project happen will give money. And if the goal is met, that money goes towards the new project.

What Gives It an Edge

The business owner can get the word out about their new project early. That’s because crowdfunding stirs up public interest. It basically works like extra marketing for free.

That also makes it a good option for people with big ideas who want their project to pick up big investments some day. It can create a buzz around a new invention or product even before kicking off a marketing campaign.

What to Watch out For

Crowdfunding can be competitive. If the business lacks novelty, it might miss out to other projects.

2. Bootstrapping

This process is also known as self-funding. It’s where the business owner ponies up money from their own savings. The owner can also get money from close sources, like family or friends.

This can be a good way to get funds from people who are confident in the business owner’s less tangible qualities. It’s also a good way to avoid many stipulations that come with cash from more formal sources.

What Gives It an Edge

The money is usually much easier to get to than other types of funding. Owners can also avoid a lot of paperwork and red tape.

What to Watch out For

This isn’t a great option for someone trying to figure out how to fund a business that is big. Most individuals usually just don’t have the amount of money it takes to fund a large startup.

3. Business Angels

These are private investors who are willing to come in and provide business startup funding. Often times they will look over a business plan and give critiques.

They usually group together and look for businesses that will be a solid investment opportunity for them.

What Gives It an Edge

These investors tend to want the business to succeed. That means they also can work as mentors.

What to Watch out For

A lot of the time, these angel investors will ask for things like ownership equity. New business owners should make sure they aren’t giving up too much for startup funding.

4. Contests

New business owners can pick up startup funding through competitions with other entrepreneurs. In these competitions, business hopefuls put together their best business plan.

The goal is to pitch their idea and show how it stands out from the others. And the contest winner can usually pick up funds from impressed investors.

What Gives It an Edge

This is a good way to get a buzz going about a product. It also forces new business owners to get to know their product. It encourages them to create in-depth business plans and detailed business models.

What to Watch Out For

Winning contests takes a lot of work. A loss can be frustrating and might end up being a lot of wasted energy.

5. Bank Loans

Banks will loan money for new businesses and projects. They usually will ask for a solid business plan that shows details about how the business will be profitable.

Banks will also pay attention to the business owner’s credit history when deciding what startup funding to loan. It’s a good idea to know credit and try to boost low credit before applying for a bank loan.

What Gives It an Edge

This is a good way to get large sums of money for a project. And it is a fairly quick way to generate money.

What to Watch out For

Loans can require high collateral. That means there is a risk of losing that if plans go south.

6. Government Programs

For the right project, the government will give startup business grants to jumpstart a company. To secure funding, a plan will need to pass the approval of a grant committee.

What Gives It an Edge

Government startup business grants can be a big chunk of cash. It’s a good way to start out with solid funding.

What to Watch out For

A lot of the time these funds are tied up in a lot of bureaucracy. That means it could take a good amount of time and paperwork.

7. Microfinance Loans

Wondering how to get a loan with bad credit? Microfinance loans could be an option. These groups are centered around loaning money to smaller businesses that don’t want to go through a bank.

Check this out for a closer look at options for low-credit loan seekers.

What Gives It an Edge

They can be a lifesaver for people with low credit who can’t get a bank loan.

What to Watch out For

The loan amount is usually pretty modest and requires a good amount of paperwork.

8. Business Accelerators

These are sometimes called business incubators. And they tend to circle around universities or community development groups.

A lot of these groups will give new entrepreneurs free resources like office facilities or guidance. Some also provide money for a business to get going.

What Gives It an Edge

It’s a good way to get guidance and build out relationships with other business owners.

What to Watch out For

This route usually means the business is linking up with other groups. That might mean collaborating often and spending time at events.

More Advice for Entrepreneurs

These eight ways to get startup funding should help you get your business going. But we have more tips once that business is up and running.

Check out our tips and tricks page here for business advice and keys to success.

About the author

Atul Patel

This post has been written by Atul Patel. If you like this article, you can share with others. And if you also, want to contribute to Iterians, please check our guest post page.

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