In a recent study it was shown that there are most of the businesses that fail during the first year of operation. The main reason behind failing of business is the lack of funding. Money is considered as one of the most important bloodline of any business. Financing a startup or small business can be a difficult, drawn-out process, especially for those with poor credit. While there is no standard minimum credit score you must have to get a business loan, traditional lenders have a range they consider acceptable. In this article we are providing 7 Best finance solutions for startups. With these sources you will get a guide for startups that will extremely helpful to you to raise capital for your business.
Is it easy to find business financing solutions?
Yes it is quite easy to find the financing solutions if you are starting your business. It can be done by working with the right investors and taking the time to be purposeful in your pitch, you can take important steps toward funding your company. We are providing some of the easy and effective financing options for those who are planning to startup their own business as a businessman. Have a look through it and find out which one is best for your business.
- Self funding or Bootstrapping
In the beginning the entrepreneurs often have trouble getting funding without first showing some traction and a plan for potential success. At that time you can invest from your own savings. It is much easy process to raises because it has less formalities/compliances, plus less costs of raising. In most situations, family and friends are flexible with the interest rate. In simple words we can say that it is the self funding for your startup. This is considered as one of the best option for the entrepreneurs who have just started their business. On the other hand getting funding can be one of the difficult task for first time founders unless they show some traction and a business plan that has the potential of making the money in the long run. If you are planning for the initial funding requirement for your business is small then bootstrapping is one of the best choice to begin with.
If you are thinking for the startup then crowdfunding is also considered as the newer way. It is gaining much popularity. In simple words it is taking a loan, pre-order, contribution or investments from more than one person at the same time. There are several ways in which crowdfunding can help you. In the beginning it ascertains that your startup idea is believed by other experienced players in the ecosystem. On the another hand it will also help you raise funding right from the first stage itself i.e turning your idea into a full-fledged business. It will get your startup crowdfunded can get you right feedback at the initial stage.
- How crowdfunding works?
An entrepreneur will put up a detailed description of his business on a crowdfunding platform. He will mention the goals of his business, plans for making a profit, how much funding he needs and for what reasons, etc. and then consumers can read about the business and give money if they like the idea. Those giving money will make online pledges with the promise of pre-buying the product or giving a donation. Anyone can contribute money toward helping a business that they really believe in.
- Angel Investment in your startups
The angel investors are the ones who are with the surplus cash and have a keen interest to invest in the upcoming startups. These individuals can work alone or in groups of networks to screen startups, share research, pool their investment capital, as well as to provide advice to their portfolio companies. Apart from offering money, angel investors can also offer mentoring and advice for your startup. The angel investors also work in groups of networks to collectively screen the proposals before investing. They can also offer mentoring or advice alongside capital.
- Venture Capital
Venture capitals are professionally managed funds who invest in companies that have huge potential. They usually invest in a business against equity and exit when there is an IPO or an acquisition. Venture capital investment occurs after an initial “seed funding” round in Startups. The first round of institutional venture capital to fund growth is known as the Series A round. VCs provide this financing in the hopes and interest of generating a return through an eventual “exit” event. This exit can be in the form of the company selling shares to the public for the first time in an initial public offering (IPO) or undergoing a merger and acquisition of the company. A venture capital investment may be appropriate for small businesses that are beyond the startup phase and already generating revenues.
- Funding from business
The businesses can also consider Incubator and Accelerator programs as it is considered as a best funding option. Incubators are like a parent to a child and Accelerators so more or less the same thing. At the early stage raising funds through incubators and accelerators is useful for startups as these options are readily available in almost every major city. The programs of Incubators and Accelerators typically run for 4-8 months of duration during which a startup founder is introduced to various mentors, investors and entrepreneurs that have enrolled for the same program.
- Raise Funds by further activities
We all know that there is an increase in the number of contests has tremendously helped to maximize the opportunities for fund raising. It encourages entrepreneurs with business ideas to set up their own businesses.
- Increase money with bank loans
You can easily get the funding loan from the bank because funding from bank would involve the usual process of sharing the business plan and the valuation details, along with the project report, based on which the loan is sanctioned.