After finalizing your idea’s efficiency and completing the market research, you need to raise funding(Money) to start and grow the idea. To raise funds for your startup is one of the most significant parts of a startup and most of the ideas fail in this step. I know it is arduous task but not impossible, so here we are going to share a list of 14 wise ways on “How to raise money For Startup”.
Okay so let’s get started,
Before going to fund raising,
Actually, before going to raise money to start a business, you need to notice something; I mean you need to clarify your idea’s valuation; you also need to make a perfect market research and also a valuable Business plan.
Actually, nobody will invest in your idea until you make them sure about the value. So to convince them, you will have to show them your idea’s concernment by business plan.
You also should learn about How to research market before going to startup.
So let’s understand the funding procedure of Startups.
It is a massive part of any startups.Actually, raising money for a startup is divided into mostly 3 common steps. Entrepreneurs raise money for their startups in 3 steps that are given below,
(1). Initial funding,
(2). Seed funding,
(3). Venture capitalist funding,
- Series A
- Series B
- Series C
All these stages of funding help startups to become successful but all are like a game stage, to complete every stage you have to complete the previous stages and some tasks.
Soon we will write on it in more details. For now, we’re only going to disclose some ways for initial funding procedure.
14 Wise ways to raise money to start a business,
Actually, in the initial funding stage you have to invest in your startup yourself because no investor (Angel or VC) wants to invest in this stage of a startup. So this is the first big hurdle in your startup journey.
But Here are some wise ways to raise money for startup,
1). Use personal saving
First of all, you should use your own savings or property. When you want to start a business, you may have to forgo your income for a few years, until your gain money starts flowing. But in the case, when you have no more funds for invest then go to the 2nd way.
2). Find a wealthy Co-founder,
This is also an alternate way for the topic “How to raise money for start a business”. When you have a good idea, and some money then you can find co-founder(S) to raise money. This is not a bad idea but you have to choose them with prudence.
Co-founders will help you financially and practically. Actually, when you have partner(S), then definitely you will get more resources to raise money and other growing term.
But here is one notable term is that, in this case, mostly all partners have equal authority in the company.
3). Convince friends and family
If you don’t want to trust anybody or find co-founders then you should go to family and close relatives.
This way also isn’t bad. You can raise money from them on the loan or equity basis. I mean you can offer them either interest or stacks of your company.
But before all, you need to convince them, you need to pitch your business plan, and make other efforts to convince them.
4). Online lending(Loan) or peer to peer lending,
This is one of the innovative ways to raise money to start a business. Nowadays many of startups get funding through this way.
This is a type of crowd sourcing; here the investors lend their money as the loan.They connect online with entrepreneurs and after understanding the idea’s valuation they finance their money on interest. Actually, it is a type of loans or finance.
Some of websites like OnDesk, Kabbage and lendbox provide this service to entrepreneurs.
5). Go to Crowdfunding
This is an ultimate way for the topic “How to raise money to start a business”. Here the entrepreneur raises funds by crowd (investor community).
This term is different from online lending; here crowd invest in your business, they don’t finance money. They invest money in lieu of shares of business or reward for donations.
Actually, in the case of reward, you can offer them discount on your products, & also mention them in your website etc.
But to get funding to your business, you need to convince them properly.
Grants are another good way to funding your business. Actually, grants are a form of funds that are donated or provided by government or individual organizations.
Every country has their own scheme for upraising entrepreneurs. They provide loans or donations on the basis of the idea’s valuation.
For getting grants, you will have to find some organization of your country or contact with your government agency of entrepreneurship.
This is a specific type of loan that is provided by semi-governmental or individual organizations. They financially help entrepreneurs for their valuable business ideas.
Gramin bank is an example of this type of organization. So to get finance, you will have to find this type of organizations of your area. Then your work is to convince them and get loans for startup.
8). Find Accelerators
Accelerators are a type of programs that have fixed tenure and curriculum. These types of programs are conducted by local investors so you can find them online, you may also have to contact with entrepreneurship cell of your area.
These types of investors give you small seed investment in return of your equity stake.
Actually, they are locally based investors so this way is not too good for big startup.
9). Find incubators
They are mainly organizations, that provide space and other necessary equipment to startups. According to Wikipedia,
“A business incubator is a company or organization that helps new startup companies to develop by providing services such as management training”
They provide services like networking activities, high speed internet access, access to bank loans, advisory boards and mentors, and marketing assistant etc.
They support startups in the return of equity stacks of company. To Find incubators you have to find your country’s list of incubators and then convince them. This is also another good way for “How to raise money to start a business”.
10). Business credit card
This is one of the most readily available ways to finance a startup. Actually, banks also provide the business credit card that can help in a big way for initial funding of startup.
When entrepreneurs fails to secure investors or friends and family then credit card scheme attracts them. For more inquiries you should contact with your local bank’s branches.
But one thing to consider here that the biggest drawback of this way is that, the bank’s interest is too high.
11). Go for Bank loans
This is an old common method for raising money for start a business. When you fail in above ways for raise money, then this is the finest option to you.
Actually, all banks have different schemes for small business funding and every bank wants to invest their money in profitable place so if your idea is not more valuable, then they easily reject your request.
But the biggest con of this way is that their rate of interest is too high.
12). Find Angel investors
Now we come to angel investors. Actually, when your idea needs a big boost to start and you can’t easily arrange that then going to Angel investors is one of the best ways for the topic “How to raise money to start a business”.
This is purely official way for funding; here they invest in your idea in return of equity stack. Every startup needs angel investment in their seed funding stage. But if your idea is too significant and big then you can take their help in initial funding stage.
There are some platforms that connect entrepreneurs to investors; Angle.co, Gust, Micro ventures and Investors circle are biggest network for investors and entrepreneurs.
13). Start an online business
Believe me; this way is being followed by me. Actually, if you are planning a startup and lack money, then you should start a very small business or online business.
I am sure this way will prove to be too fruitful in my startup journey. At this time, I am also polishing my knowledge and increasing my experiences.
So finally, this way is helpful for a long strategic mission; if you’re going to start presently then you should follow this way.
14). Thiel fellowship
At last, this is final way but only helpful for dropout entrepreneurs, whose age is less than 23. Actually, thiel fellowship is type of grant that is conducted by Peter thiel (a reputed entrepreneur, co-founder of PayPal and board member of Facebook.)
This fellowship is dedicated to those entrepreneurs who are actually college dropout and presently younger than 23. Selected entrepreneurs are granted USD 1 million for startup.
Finally, one of the best tips for entrepreneurs is that, for getting fund easily you will have to research your market properly and make a perfect business plan.