Startup Financing: Key funding options for your company

Bootstrapping

Bootstrapping is self-funding. This can be one of the most reliable ways to finance your startup. When planning to start your business, you need to focus on the basics. As a first-time entrepreneur, you may or may not get funding from capitalists. Therefore, you can consider self-funding.

Self-funding should be your first funding option as it will help you drive a wide range of benefits. When you invest your own money into the business, you can work on growing the business and generating revenue. Furthermore, you wouldn't have to dilute the shares in the initial stages.

Bootstrapping will allow you to stretch the resources of your business. Most small businesses can rely on bootstrapping rather than reaching out to the VCs in the initial stages.

Crowdfunding

Since the concept of crowdfunding was introduced, it has dramatically helped people. One of the most prominent ways crowdfunding can be helpful is to draw funding for the business.

If your idea is attractive and profitable, outsiders are likely to invest. However, it is advisable to implement crowdfunding. As a new-age entrepreneur, you can try out new ways. This can also be a great way to meet like-minded investors. Crowdfunding isn't a small thing but requires a lot of people.

In the case of crowdfunding, the investors may not get monetary benefits, but they can get extra benefits. They may get free samples or anything related to the product. This can be efficient for the investor to diversify their profile.

However, it is necessary to note that crowdfunding is a very competitive market. Several businesses are in this field trying to drive money. Therefore, it is crucial to develop a strong idea that can help you get more investments. Just including business ideas and images will never be enough.

Angel investors

Onboarding angel investors can be of great help. The angel investors are very likely to new-age startups with solid business plans. They may either work in a group of networks or as individuals. One of the significant benefits of getting angel investors on board is getting better advice on mentoring.

Angel investors have invested in tech giants like Yahoo, Google and more. However, onboarding an angel investor means that you may need to dilute the equity a bit. However, they are ready to make risky investments as well.

While angel investors can be helpful, they may also have some cons. The investment made by angel investors is likely to be less than that of venture capitalists. You can research an angel investor in your area and, eventually, get the right one for growing your business with investment.

Small business credit cards

Small business credit cards can be helpful as well. Various credit card issuers allow the growth of small businesses. They can offer multiple perks like airline mileage points, cash rewards and more.

Many credit issuers will also tie the small business credit card to the owner's personal credit card. The credit history of the owner will help in maintaining the credit history of the business credit card. Nonetheless, it is advisable to prevent default payments to ensure significant growth and proper credit score.

The interest for the unpaid balance can range from 5% to 19.9%. There may be issuers who will have very low or no introductory charge. You can apply for a business credit card online or via the bank. You can check the different companies that provide all business credit cards.

One of the benefits of a small business credit card is that you don't need to provide any personal guarantee. This can often prove to be better than professional funding. Furthermore, many small business owners consider a small business credit card a better option than funding or a traditional credit card. Nonetheless, it can help to drive traffic in no time.

Small business loans

Small business loans are available from various lenders. However, every lender will have its own category. These small business loans can be an efficient option for the growth of your business. Furthermore, if you are indulging in new research, these small business loans can fund those as well. Apart from that, small business loans can help expand the business.

Different types of small business loans are available in the market. Nonetheless, the loan you choose should completely depend on your needs and how long you may need to pay off the loan. It is advisable to follow the terms and conditions for small business loans. Some of the most common types of small business loans available in the market include the following:

• A small business line of credit.
• Working capital loans.
• Accounts receivable financing.
• SBA small business loans.
• Small business term loans.
• Equipment loans.

Venture Capitalists

Startups can seek funding from venture capital firms. This can help you get significant capital, strategic assistance and also drive potential customers. Funding from venture capitalists is easy to obtain.

Venture capitalists will invest in your business only if the idea has the potential to grow. Whenever you pitch the idea to VCs, you must come up with a proper description of the product, explain the customer acquisition model and even prototype of the product.

The venture capitalists will focus on the investment efforts. Before reaching out to a venture capitalist, you need to know how your focus aligns with the company. Furthermore, they can also help your business grow significantly in the long run.

There are several financing options available in the market. As a startup, you may need funding at a particular stage. Therefore, you must identify the potential market and choose which funding option would be the most efficient in the long run.