The most exciting thing about the business climate that we are beholding today is that startups are able to scale a lot faster than ever before. It was not too long ago that Facebook was just a website that a few people started using and now it is a global phenomenon less than 2 decades into its inception. The Google search algorithm was just an experiment conducted for a research paper by two Computer Science master’s students at Stanford University, and now it’s one of the 10 biggest corporations in the world.
These companies would have gone from startups to multi-billion-dollar empires without adequate funding though. If you believe that your startup idea has what it takes to become the next big thing, read on to find out how you can get the funds to bring your idea to life. Here is what you have to know about business funding for startups.
Following the footsteps of Facebook and Google, one of the first things that you can do to secure adequate funding is by pitching your idea to an angel investor or a venture capital firm. Mark Zuckerberg got the first check for Facebook from his schoolmate Eduardo Saverin, who was also a very good Angel Investor. Saverin eventually became a co-founder of Facebook.
The biggest advantage of seed funding from angel investors and venture capitalists is that you do not ever have to pay these back if your business fails. If your business does well, however, taking these investments could become more expensive because you would have given up equity that is potentially worth millions of dollars.
If you want an option that allows you to get funding without having to pay anything back and not have to give any equity away, crowdsourcing could be a great option for you.
The only thing that you have to keep in mind when it comes to crowdsourcing is that you have to really know what you are selling inside and out and you cannot afford to pivot into something else. People will only give money to your idea if you yourself know this idea well, they will not be willing to invest in something that may not even end up materializing.
A business line of credit is great if you do not have a clear idea of what your expenses are going to be in the immediate future. A business line of credit will allow you to spend only on things that you need and pay back what you owe.
The advantage that this has over a traditional loan is that when you have a business loan, there is a chance that you might be borrowing too much and you are compelled to spend the money on things that do not actually make sense just because the funds are available, then you will have to pay interest on that unnecessary spending. A business line of credit will allow you to trim the fat and keep your operations lean and ruthless.
Of course, a list of funding sources for startups would not be complete without small business loans. Small business loans are great because they allow you to choose from a wide variety of different interest rates, payment periods, and even forgiveness schemes such as in the case of SBA loans.
Keep these guidelines in mind and you will quickly find out that no matter what kind of condition your business is in, there is always an option to gain funding. Explore your options wisely and you will be able to secure your company’s future.