A great startup idea is nothing without funding, but what options are out there in 2018 to get your business off the ground?
Loans and investors are always a common choice, however, newer solutions like crowdfunding are also becoming popular.
Let’s take a closer look at 7 top ways to fund your startup this year.
1) Angel Investors
The tried and true Silicon Valley approach is to sell yourself and get angel investors on board with the idea. These are wealthy individuals or groups that will front you the cash you need in exchange for an equity/ownership stake or a return on the investment.
While there is nothing new about this path, the internet is changing how founders and investors connect.
If you have done your research, have a solid plan, and maybe even a minimum viable product ready to show-off, seeking traditional investors is a good option.
The benefit of using a loan to fund your startup is you don’t have to give up equity and you don’t necessarily have to alter your ideas to suit the financier, though business loans may still require you to present a plan.
If, however, you have poor credit you are unlikely to be approved by a bank or will get bad terms with a high-interest rate.
Alternatives can be found online and Peer-to-Peer (P2P) lending is becoming increasingly popular. This is where online platforms connect borrowers with individuals instead of larger financial institutions.
Bootstrapping isn’t easy, but it does leave you in control and usually ensures that you don’t grow too quickly.
It simply means funding the startup yourself with savings, while you continue to work, freelance, borrow money etc. The term bootstrap comes from the old phrase “pulling oneself up by one’s bootstraps.” i.e. getting on with it and putting the work in.
The downside is that you’ll often be so focussed on obtaining the money that you’ll have less time to actually develop the business—this is especially true if you stay doing a regular 9 till 5 job.
Nonetheless, bootstrapping has a certain charm to it and if you pull it off you’ll feel great that you did it all yourself.
4) Incubators and Accelerators
In 2018 you don’t have to go about developing and funding a startup all by yourself. Co-working spaces, where the startup community collaborates and shares resources and expertise is a growing phenomenon and these tie in closely with incubator and accelerator programs.
These are groups of investors and experts that nurture your startup and even provide initial investment to get it off the ground. They might be colleges, government-backed, or private groups.
A modern solution is crowdfunding where individuals, instead of just traditional investors, seek to invest in startups.
The leading crowdfunding websites give you a platform to set up a campaign where you describe your business idea and what your aims are with a webpage and multimedia—anyone from around the world can then make a pledge.
Depending on your approach you can give these investors something in return; a simple thank you, guaranteed access to the finished product, a smaller gift etc.
The key benefit is the reach that these platforms can give you, especially if your idea is good enough to go viral.
6) Trading Skills and Services
If you live in a big city there is likely already a bustling startup community, with many other founders seeking funding.
One way to bypass a portion of funding is to double-up with another entrepreneur and help each other.
Perhaps you or members of your team are great graphic designers and the other group know how to code. Trade these services and neither of you have had to go into your pocket directly.
Local government grants and grants from private groups are certainly available if your startup meets their criteria. For example, the Small Business Administration has been known to support businesses run by women, veterans, and minorities, or that brings benefit to the local community.
Are you in the process of securing funding for a startup or have you already succeeded as an entrepreneur? Share your experiences in the comments below!