01 logo

How may i fund my startup company?

by Abraham Verninac 2 months ago in startup
Report Story

How can I find funding for my startup company?

How may i fund my startup company?
Photo by Mika Baumeister on Unsplash

Many people think that funding for startups is available to everyone, including hobbyists and part-timers. This could not be further from the truth. Startups usually need a lot of funding because they are not yet turning a profit and already need to cover their expenses until they can do so.

Debt financing

The most common form of startup funding is debt financing. This is when you borrow money from a bank or some other lender and agree to pay it back with interest over time. Debt financing can be a good option for startups that have enough collateral to back up their loans.

That way, if the business fails, the lender has something to collect on in order to recoup their loss. The downside is that debt financing requires monthly payments and often carries high interest rates. You'll also need to prove your ability to repay the loan before you can get approved for it — which means you'll have to have an idea of how much cash you'll need, what your expenses will be and how long it will take before you see any profit from your business.

Equity financing

Grants and other types of indirect funding

There are many different ways to fund your startup company, and the type of funding you choose will depend on your business model, your industry and the stage of your company. Here's a look at some of the most common options. Grants and other types of indirect funding A grant is money that's awarded by a government agency or private foundation to help fund a specific project or research initiative.

The idea behind grants is that they give people with good ideas (and proven track records) an opportunity to pursue those ideas without having to worry about revenue generation right away. That said, there are two types of grants — those awarded directly by funders and those awarded through competitions where you need to submit an application along with other applicants in order to be considered for funding.

Indirect funding can also come from friends, family members and angel investors (if you're lucky enough to attract one). But this type of funding comes with strings attached: You'll be expected to pay back every penny plus interest once you start generating revenue from your business.

Crowdfunding

The first step in starting a business is to figure out how much money you'll need. The second step is deciding how you're going to get it. Where can you get startup funding? Here are some of the most common options: Personal savings. If you have money in the bank, this is often the easiest way to fund a startup.

But if you're bootstrapping, make sure it's enough to last until your company starts bringing in revenue — and that you don't need it for anything else. Family members and friends. This can be an excellent source of early-stage funding (if they believe in your idea), but ask them first because they might not be able to afford it or may not want their names attached to yours if things go wrong later on.

VCs (venture capitalists). VC firms raise money from investors such as pension funds and wealthy individuals and then invest that money into startups with great ideas but no track record or business model yet — often at an early stage when there's still plenty of risk involved but also lots of potential payoff if things go well.

All in All...

First thing first: if you can, bootstrapping is the best option. Bootstrapping allows you to keep 100% of your company and also gain a lot of knowledge about how to be scrappy and do things for yourself. It also minimizes the risk of failure -- you're much less likely to fail if there's no investor's money on the line, so keeping it all in-house will keep your motivation levels high.

startup

About the author

Abraham Verninac

🤓 I am an entrepreneur who builds brands/influencer. And I want to chat with anyone that is interested in starting their own business/brand or who wants to take it to the next level! You can message me anytime!

Reader insights

Be the first to share your insights about this piece.

How does it work?

Add your insights

Comments

There are no comments for this story

Be the first to respond and start the conversation.

Sign in to comment

    Find us on social media

    Miscellaneous links

    • Explore
    • Contact
    • Privacy Policy
    • Terms of Use
    • Support

    © 2022 Creatd, Inc. All Rights Reserved.