There are a few main ways to raise money to fund your business startup. First, if you have money concerns, you may find this useful advice from Creditfix worth reading over before you get started. When you’re ready to get going, you may also find it useful to know where to begin. Today, we’re going to cover some of the most well-known ways to secure funding for your startup. Now more than ever we may consider work from home options or starting our own ventures to make parenting and working easier together.
Speak to family and friends
If you’re looking at getting your new startup off the ground, you may have considered borrowing from people you know. There are upsides and downsides when it comes to approaching friends, family, and other contacts for funding with your business startup.
On one hand, when dealing with people that you know and who are close to you, it’s far less business-like and less stressful. These people are also more likely to judge you on your character and if they know that you are 100% committed, they may be more likely to back you financially than any other kind of unknown investor who is only likely to judge your proposal solely on whether they believe the opportunity will fit with their business portfolio.
However, where your business start up and process fails, and you lose the investment, you could find that you have some very difficult phone calls to make to friends and family who trusted you with their money.
Angel investors & venture capitalists
You may think that angel investors and venture capitalists (VC) are more or less the same thing, but you’d be wrong. There are some major differences.
An angel investor is an individual business owner with a high net worth, meaning they are able to foot the bill to get your business started. Typically, these investors will ask for a share in the company (normally under 50%), and as part of the deal, you may be able to buy back those shares after a certain amount of profit has been paid to the investor over a number of years.
In comparison, a VC fund is typically set up by an investment group. The main advantage of this setup is that you will generally benefit from the advice and guidance from multiple experts within the group. However, VC groups could ask for more than 50% of the business, and will generally want to sell the business for a profit after a number of years. You could think of this as a get rich quick scheme masterminded by business experts who can nurture and inflate your startup idea to market buoyancy, and if you are all about the reward and and you are not too bothered about selling your business, this type of deal could be the answer.
A note on crowdfunding and business startup …
Crowdfunding may seem like a great idea until you realize that you will have to publicly announce your business startup idea, leaving yourself open to copycat entrepreneurs and other business people who are better funded and in a better position than you to bring an identical business to market much faster than any crowdfunding plan would allow. But the funding options are real. The choice, ultimately, is yours.