When one wants to put up a startup enterprise, the greatest concern that many entrepreneurs have is raising the startup capital. All of us realize that it is important that an entrepreneur has a sizable amount of money to pump into a startup so that it can sustain its operations and expenses before it starts bringing in profits. Additionally, each step that a business startup undertakes in the process of developing requires that one has some capital to finance it.
Even though most of us consider the process of raising money for a startup to be challenging, it is not something that is impossible, more especially to those individuals who are creative. If you are the type that can talk to people, has patience and you are persistent enough you will be able to raise a substantial amount of money for your business. In this article, we will highlight some of the clever and creative ways that one can use in raising startup capital for their businesses.
Ways to raise startup capital
Even though it is a mode of startup funding which is in its infancy, it is one of the modes that has turned out to be the fastest rising and most effective one. As its name shows, in this particular form of funding, the startup project is funded through personal contributions from those individuals who are involved in the project.
When you want to raise funds through this method, you should start by writing a proposal. It involves coming up with an idea; then the next phase involves taking the proposal to those people who you think are interested in it. When it comes to contribution, the funders will decide on the amount of money that they want to commit. Since it has become very effective, crowdfunding is gaining prominence at a very high rate.
2. Angel investing
Most of those people who have made a fortune, either through business or any other way, are usually interested in investing back their extra funds into startup businesses. These guys are commonly known as angel investors. Companies that benefited from angel funding when they were in their startup level include facebook, google, twitter and skype.
Angle investment funding is important because its benefits go beyond financing. If you are lucky to get a good angel investor, you are sure of getting good advice and business connections. Most angel investors are very willing to commit their money to a startup, so you are advised to be on the lookout for such opportunities.
3. Friends and family
Another sure way that you can get funding from for your startup is from family and friends. Some of them can give you funds for free, while others would want to become shareholders. Either way, it is a good way to secure funds for your startup, bearing in mind that you will not need to return the money, and if you do it will be interest-free.
Some other popular ways that one can secure funding for a startup include the use of credit cards, even though this is a temporal source, entering into a partnership with an interested party or even going for bank financing.