Powerful Methods to Get Investment for Your Startup Business
Let’s face it. You may have a great business idea, goals, and a brilliant plan on how to succeed, all in your mind. However, getting sufficient investment for your startup business can be challenging. It’s not also always easy to find someone who would be ready to fund your business (or a rich aunt or uncle who leaves you their fortune).
However, it’s not impossible to get funding. But how can you easily source investment for your startup business? Find out below.
Best Options You Can Use to Finance Your Startup Business
Before we can get into how you can scout for investors, there’s one pre-requisite you need. A business plan to help you prove that you have a business idea worth pursuing. Outlining it allows you to get a holistic view of your idea and find any issues before getting further into the business.
And most importantly? It can help you get sufficient investment for your startup business. But what should the business plan entail? It should describe who you are, your business objectives, what product or service you will offer, where you will operate, your mission statement, and your industry.
What’s more? Your plan should also outline your target audience, competitors, budget, financial projections, and power structure. For this, conduct in-depth market research into what pain points you will help solve and whom you will target.
Additionally, leverage analysis tools that benchmark your business against competitors to find out who they are, what differentiates them, and how you can stand out.
To top this off, define realistic financial projections that can increase your chances of getting sufficient investment for your startup business. And then, with your business plan ready, use these tactics to get financing for your startup business:
1. Invest in Yourself
The first investment for your startup business should be from personal savings or sales already made, a process known as bootstrapping.
It’s a challenging way to finance your startup since limited resources could undermine your product or service quality.
However, it gives you total control over all business decisions. All of your energy also goes into making your product great in the way you envisioned it, without pressure from investors.
2. Ask Friends and Family to Invest
Friends and family members can be an excellent investment source for your startup since you may not have to pay the money back with interest or give it back at all.
However, one significant risk associated with this form of funding is that losing the money could lead to very awkward family reunions or relationships with friends.
On the other hand, getting investment from family and/or friends may motivate you to work extra hard and not let them down.
3. Get a Loan
If you need a small investment for your startup business, you can choose to get a loan. You can get one from institutions, including the Small Business Administration. Their program can connect you with loans from private lenders and micro-lending nonprofits.
However, the application and approval process may take too long and prove challenging if you need financing right away. In this case, you can leverage other online micro-lenders, private organizations, investors, banks, and associations that give micro-loans to qualified startups.
However, remember to attach or carry your business and marketing plan whenever you need to apply or meet one of these micro-lenders. This way, you can use it to convince them that your startup is worth their investment.
4. Leverage Crowdfunding
With crowdfunding, a pool of investors can contribute small amounts of capital and provide investment for your startup business. You can leverage the vast network of people on social media and crowdfunding websites like Kickstarter, Fundable, Crowdfunder, and others.
However, you need to convince these people to provide investment for your startup business by showing them that your idea is worthy of their money. To solve this issue you need to create a better proposal using a well-described format.
5. Join an Accelerator Program
Accelerator programs like Y Combinator, Techstars, and MassChallenge are a great way to get sufficient investment for your startup business.
However, to be eligible, you need to have a product with either free users, few paying customers, or signs that it’s a great market fit. Most of these accelerator programs also only accept a few businesses and provide capital for a percentage of your equity.
But that should not deter you. Once accepted, you get access to personalized guidance from investors and seasoned founders. It also allows you the opportunity to collaborate and partner with other innovative startups.
6. Find a Strategic Partner
Partnering up may be the best investment for your startup business because it reduces your liability if things go south.
Best of all? Combining your knowledge and skills can lead to innovative ideas, faster solutions to issues, and proper management of your startup budget.
However, there are disadvantages to partnering up when seeking investment for your startup business. For one, you get only half or a third of the profits, depending on how many partners you get. Secondly, it can lead to many disagreements and conflicts that can lead to the startup’s failure.
7. Work with Angel Investors and Venture Capitalists
Another way to get investment for your startup business is to get smart investors to buy shares of your company.
Angel investors are often former venture capitalists or entrepreneurs motivated by your business’ potential to offer great returns. They may also want to provide mentorship or give back to the community, and you can find them on networks such as AngelList Venture. You can also seek them out via personal connections or financial advisors.
On the other hand, venture capitalists have more structure and are mostly firms specialized in making investments in startups. They demand more control, focus solely on the business, and in most cases, commit more capital.
As seen above, you have a variety of options you can use to source investment for your startup business and become a successful entrepreneur. You can decide to use your savings, partner up, leverage angel investors, or use crowdfunding.
However, remember to have a sound business plan and realistic financial projections to convince people to invest. Do you need help getting sufficient investment for your startup business? Get in touch, and we can offer tailored advice based on your business idea.
This post originally published at Communal News.