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Are You New In the Start-up Ecosystem? Follow this Funding Guide

Funding - cfamedia

With that very exciting idea, that you have and your enthusiasm, to embark on your start-up journey, you, suddenly, lost the energy to continue your pursuit because you have no idea on, how to get started and stopped in your track, due to lack of funding.

To make the situation, more unbearable, the absence of liquidity may cause you difficulties, in paying your team, paying bills, such as rent and electricity.

A lack of a strategic plan, to raise funds, appears to be, one of the reasons, why ideas are not executed, or, just get dropped, along the way.

Getting the right source of fund, ensures that you commence your business and sort out, all necessities that guarantee the smooth running, of your venture, as a business.

In case you are just venturing into the start-up journey and thinking of how to access some funding to carry out your activities, below are some guides, to help you out:

Bootstrapping

This is a very popular way in which start-up entrepreneurs, get to fund their businesses. In bootstrapping, the entrepreneurs get to start operating the company, with the little capital that they brought into the business, by themselves.

You, as the entrepreneur, will start by funding your venture, personally, while trying, in any way you can, to minimise expenses.

Bootstrapping involves you doing a lot of self-funding, even, to the extent of covering the expenses that, hiring labor, might cost.

This will, in turn, save you costs that can be used, for other important utilities.

The edge you get from bootstrapping is that, you may find it quite easy, to convince an investor that, you have the capacity, to run a profitable venture, on your own, without, necessarily, breaking a sweat, to get such a potential investor to further fund your business.

Investors

You can get funded by an investor, in exchange for them, having shares in your business, after they have provided you with funds. Investors, however, come in different forms. These include:

Personal Investor

They are, usually, the closest to you and they include your friends and families.

It is, your duty, as an entrepreneur, to identify the members of your family and friends that can loan you money, for carrying out your business venture.
You could be lucky, as some of them would give you access to loans, at a very low-interest rate.


Also read, 5 Ways To Attract Investors To Buy Into Your Business Idea


Angel investors

These are not your friends, nor, your family members. They lend you money, in exchange for equity. They, usually, fund start-ups, who are in their early stages.

Venture capitalists

These are, usually, investors on the high end, as they require that, your business has value. This is, the only indication that they would invest, quite a significant amount of money, in your business.


Also read, Is VC Funding The Best For Your Start-up?


This comes with a price, as they take up, part ownership of your business.

Incubators & Accelerators

Most start-up entrepreneur, go this route, to get funded. Application, to an incubator, or, accelerator program, gives you the opportunity, to take part, in their programs. It gives you the opportunity, to understand the start-up ecosystem and how to, eventually, scale.

Crowdfunding

This is a way, of gathering funds, from a large group of people, to fund your business. They are, usually, people who are interested in what you do and are ready, to give you all the assistance you need.

Contribution of small amounts of money by each member of a crowd can amount to something significant.

A good crowdfunding campaign targets the right crowd. You do not have to give up your equity.


Featured Image: sbentrepreneur.org


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