It is not surprising to know that most people are afraid to begin their entrepreneur journeys due to financial issues. In such circumstances, individuals find it difficult to sustain their start-up because of a lack of capital. In the initial stages, there is instability and uncertainty. However, does not indicate that the idea is a failure. Sometimes, it is funding that ensures the expansion and success of the start-up. Hence, here are few ways to fund start-ups in the initial days:
As the name suggests, it is the process of raising funds for any venture through a large crowd. Yet, a large number of people have to pay a relatively small amount. Due to the number of people involved, the total fundraised is generally a big sum. Crowdfunding typically takes place through the internet. There are several designed for this purpose. There are online crowdfunding sites, you can check them out as well. They help to raise money for startups and other business ventures. Hence, it is a good way to finance start-ups.
Venture capital is a way of private equity financing. The venture capital firms give these funds to emerging start-ups that have the potential to grow in the future. They also give funds to the start-ups exhibiting success and growth. For instance- an increase in the number of employees, annual revenue, turnover, etc. Venture capitalists usually have an ownership stake. In its exchange, they provide the funds. Thus, individuals with ideas of start-ups looking for funds can consider this way as well.
An angel investor is a person who will provide the capital for start-ups in exchange for an ownership stake or convertible bond. These angel investors might also form angel groups or angel networks to provide funds to the star-ups. In some scenarios, they might also advise the emerging entrepreneurs to help them. Few of the angel investors are retired businessmen, they invest not only for monetary reasons. They might also be willing to have a look at the current business scenario. Or to train the upcoming generation of businessmen. Thus, the individuals with their start-ups have the additional benefit of getting advice or direction from experienced entrepreneurs.
It generally refers to a process where an individual begins a venture by himself/herself without external resources. Thus, bootstrapping exhibits self-reliance and can be a way to generate funds. The individual can fund his/her start-up by using the savings. Therefore, individuals who save money and have a plan in place can use it this way. This way, he/she will not be dependent on anyone for funds. The risks the person will take will solely be based on his/her savings.
INCUBATORS AND ACCELERATORS:
Incubators and accelerators are organizations that help start-ups with their ventures. The primary task of the incubator is to provide the necessary resources to the start-ups. Like the session with industry mentors, patient capital as well as interactional programs with other entrepreneurs. On the other hand, industry accelerators aim to bridge the gap between start-ups and potential investors. They work to pith-in investments. They also provide mentorship programs for individuals. Thus, both incubators and accelerators are efficient. They help to ensure support to the start-ups in the initial stages.
Start-ups are new and might appear to be a risky venture. However, with efficient planning strategy and fundraising through the right sources, they yield useful returns. Airbnb and Uber are a few of the famous examples of start-ups that became huge successes. Therefore, funds play a major role in helping the level of growth in any start-up. Planning the appropriate ways to raise funds is as important as planning the start-up itself.