Raising funds for a startup is no easy task. It often will be influenced by the economic climate which will, in turn, affect investor’s risk appetite and investment propensity. Equally several factors need to be considered when selecting a funding mix such as the stage of your business, the amount of funding you are seeking and your business model.
Funding a startup can be done in several ways. When it comes to funding options, they vary, depending on what and how your business needs to grow.
To give you a solid background, here are all viable sources to help you fund your startup like a pro.
Self-Funding
Nowadays, countless businesses are self-funded. Business investments can vary from as little as €1,000 to €10,000. Self-funding your business means you will be using your own funds or even taking a loan. The best part about it is that you will retain complete ownership and autonomy of your business.
Friends and Family
A startup business might have you reaching out to your friends and family for financial aid. This can often be one of the most dependable sources of funding, as you rely on people you know. The risks, however, include having several sources of funding and exposing your personal relationships.
Try a Crowd-Funding Campaign
A crowd-funding campaign is perfect for kick-starting a small-scale business. For this type of funding, you will have to reach out to a crowdfunding website and learn the potential business benefits. Whilst some may have a low threshold to join others may require your pitch to be approved by a business coach before you can set up your crowdfunding campaign.
An Incubator Group Member
An incubator group serves as a startup accelerator, with its sources coming from major establishments. For innovative businesses, these organizations provide plenty of support in terms of office space and coaching, and sometimes financing too.
Consider Small Business Grants
Applying for a business grant means you have a known and reliable source of funding. However, registration processes can often be lengthy and time-consuming. If you are based in the EU then the European Union offers several funding programs.
Take a Credit or a Loan
Ideal for non-risk-takers, you can fund your business by applying for a personal loan or a low-fee credit. However, this arrangement also means that you will have monthly rates to pay.
Reach Out to Angel Investors
Angel investors represent capital investors, typically located in your region. Usually, angel investors ask you to give up from 10-50 percent of your business ownership. But, angel investors also provide you with professional experience and knowhow in launching a business.
The Stages of Funding Your Startup
There are many stages in funding a business from startup all the way to the big leagues. It’s important to consider these and know what is required and what to expect.
- Bootstrapping – the initial phase which allows you to start and manage your business through a self-starting process. Whilst your business will be constrained it will also force you to think and execute a lean startup model.
- Pre-Seed Funding – investments range from €10,000- €150,000+, suitable for building a friends-and-family network.
- Seed Stage Funding – your business is steady and supported by startup accelerators, who will acquire typically a substantial amount of equity in your business.
- Series A Round – the optimizing and polishing stage of a business, involving more than one investor.
- Series B Rounds – a certain business growth, having a popular product/service, and significant profit.
- Series C – the nine-figure stage of a business. Congratulations are in order!
- M&A and IPOs –to grow your business further, sign an M&A deal. At this stage, it is best you consult a professional M&A advisor to properly navigate your business.
And one last piece of advice, always, always present your business professionally! For more information about Smart Pitch Deck and our services reach out for a free consultation.