The massive fall of economy in 2008 and the consequent chain of terminations was an eye-opener for many young entrepreneurs. Self-employment and startups are on a rise ever since. But many startups face the challenge of investment initially which decides the making or breaking of a brilliant business idea.
There are many ways of financing in the market. You need to channelize your focus on the right routes for the right outcome. Let us look at the ways you can arrange the funding for your dream project.
- ·Bet On Your Last Dime
If you are confident about your enterprise then pull out your savings, because this is the best option to escape from debt. Slay your expenses and save every nicker to your reserve fund. Since each dime is worth your sweat and blood the probability of leisure expenditures will be low. A stringent watch on the spending would have you work more on minimum cost.
Self-funding gives you absolute power on your venture without having to share it with another boss or a board of directors. You need not be answerable to anyone but yourself.
Having your money on the line would interest investors to be a part of the action for future finance.
- ·Kith and Kin Capital
Your friends and family, they are the people you know best and who would be genuinely high-spirited about your set-up. It is an easy, potent and reliable source of funding. You need not bother to prepare a professional pitch but rather keep it simple and friendly.
The strings attached to this kind of funding are personal. Someone else’s money is at stake and you should be extremely mindful when dealing with it. Otherwise it could lead to tension in the relationship.
Ensure to put everything on paper and educate them completely about the company and how their money is going to be used. Be open and provide them the insight to the risk and opportunities involved in it. And have their return planned in the form of equity or any other form of profit. Make it a mutually beneficial affair.
Your networking skills are going to come handy here.
- ·Crowdfunding – The Vogue in Finance
This futuristic method bridges investors and individuals with entrepreneurs who need funds, via an online portal. In here you can establish a direct connect with the investors.
Out of the big numbers, pool in like-minded and interested lenders to fund your project. Try to tap those who have experience in your field of business.
The power of internet lets you escape the tiresome task of running in circles to settle on your investor.
- ·An Angel Investor Can Be Your Saviour
Angel investors or business angels have been a very common source of providing monetary support for startups. Angel investors are individuals who are affluent and are willing to put his or her money in business.
It used to be quite difficult to find an angel investor, but things are changing now. They are increasing in numbers and have started to form angel groups or networks to ease an entrepreneur’s task.
As the name suggests, they offer seed funding to make your business come alive. And usually they are not bent upon an immediate return, making your life easy. But do make attempts to keep these angels happy.
- ·Try Your Luck With Venture Capitalists
A venture capitalist can be an investor or a company having enough funds to lend an entrepreneur. They are highly oriented on the turnover of the company and undoubtedly their returns.
Your business idea and plan has to be very convincing to pass the clauses prepared by venture capitalists. If it is promising, the potent of receiving a mammoth amount is a can do.
The common mistake entrepreneurs make is that they portray unbelievable targets. Keep your plans upfront and realistic, and leave the ball in their court.
So now you know who you should approach and why. If you seek at the right place, you would get backing for your startup and then just focus to gain a firm foothold in the market.