Startup Financing: 3 Financing Options For Your Business

No matter how successful you might think your business idea is, you cannot execute it without obtaining proper funding. While people might start their businesses with their own capital or borrowing it from friends or family, there are other options entrepreneurs should consider. A little warning though! It is not easy for startup founders to raise capital. But nevertheless, there are many options founders can choose from.

In this article, we will be discussing 3 startup financing options for your business.

Investors typically invest in the early stage of the businesses in return for an equity ownership interest. Angel funding has been accelerating, especially as startups are growing during the COVID times. High profiling success stories of Uber, Facebook, and WhatsApp have encouraged angel investors to make significant bets with hopes of increasing returns. The only problem is that angel investment is mostly between $25,000 to $100,000 so it is ideal for smaller investments but you may have to look for other options if you need significant funding.

Angel investors do not invest in the business. They invest in the founder of the company. So, here is what the angels mostly care about;

• Passion, commitment, and integrity of the founder
• A well thought out business plan
• A well planned financial model of the company, keeping in mind the trends, external factors, and future expansion plans
• An appropriate valuation with reasonable conditions

There are many other ways to find angel investors, which include:

• Other entrepreneurs
• Accountants & Lawyers
• Angel investor networks
• Venture capitalists
• Investment bankers
• Crowdfunding sites like Indiegogo and Kickstarter

It is an opportunity for startup entrepreneurs to raise funding through multiple funders, mostly via popular crowdfunding sites. It not only helps businesses raise capital, but also promotes a business’ products and services. This is one of the easiest methods to raise capital for your idea. You set up a profile on a crowdfunding site, describe the nature of the business, and inform the crowd about the amount you are trying to raise for your idea. People who believe that the idea is worthy enough will donate to your campaign in exchange for some kind of a reward. So, the reward may include a profit share, some form of equity, or discounts on the company’s products.

So, the key to successful crowdfunding campaign is to have a convincing story about your business, or your product, an innovative idea, and to offer a meaningful reward for donations.

Furthermore, each of the crowdfunding sites charge some sort of fee to list the campaign including a processing free or a percentage of the funds raised. Some of the popular sites include;

• Indiegogo
• Kickstarter
• Crowd Supply
• Seed invest
• Crowd cube
• Fundi
• GoFundMe
• Crowdfunded
• iFundWomen

• Specific industry sectors (software, digital media, mobile, Saas, mobile devices, consumer, etc.)
• Stage of company (early-stage seed or later stage rounds with companies that have achieved meaningful sales and
traction)
• Geography (e.g. New York, Toronto, etc.)