9 Funding Options To Raise Startup Capital For Your Business

You've come to the right spot if you've just measured the runway for your startup and realized that you'll need a lot more money and a lot faster than you expected. Are you prepared? Here's what you need to know about 9 of the most popular startup funding options!

1. Personal savings

Put your money where your mouth is and finance the initial measures on your own. Investors will still want to see how invested you are in the project, and financing your own startup is a positive indicator for them.

2. The business itself

The alternative method of startup financing is to let the company pay for itself and expand from the income generated. In fact, this is the best form of financing because it demonstrates that the company is actually growing.

3. Friends and family

Except for your friends and family, there will not be many people who believe in you if you don't have a track record or if your project is only in the early stages. 

4. Government subsidies and grants

Governments are attempting to foster entrepreneurship and creativity in their respective societies. Although the competition is fierce and the conditions are strict, having access to this comparatively inexpensive startup financing can be a game-changer for your company.

5. Incubators and accelerators

Joining an accelerator or incubation program is another way to get startup money.

Although accelerators and incubators are often confused, they are not the same thing. Both have a business network, mentorship, and some kind of organized curriculum, but their goals are distinct.

Accelerators

Y Combinator and Techstars are two of the most well-known accelerators.

Usually, the initiative begins with an evaluation round, in which eligible businesses are selected to participate in a particular venue. Between a few weeks to a few months, the firms will participate in an intensive mentor scheme.

Incubators

Most incubators provide shared office space in a coworking space, a month-to-month leasing scheme, and mentoring with a local link. That is also why businesses will be invited to collaborate in the same room. When refining their ideas, working on their offerings, product-market matches, and strategic goals, both businesses will benefit from each other's experiences.

6. Bank loans

We use banks on a daily basis, and bank loans are a popular source of startup capital.

Let's start from the beginning: what is a bank loan?

A bank loan is money that you borrow from the bank for a set amount of time. The term secured or unsecured refers to whether you borrow against an asset or not. It may be constant or unpredictable, depending on whether the interest rate is set in stone or subject to price fluctuations.

7. Convertible notes

How can you come up with a valuation while talking to investors if your startup is already in the early stages and you have so little information?

This is a good point, and it's one of the reasons why convertible notes are a common startup funding option. They serve as a buffer between the initial funding needs (seed round) and the later priced (valuation) rounds.

8. Venture equity

You can raise money without having to repay it if you use equity investment... fantastic!

Instead of repaying a debt and bearing the burden of monthly interest charges, you ultimately sell a portion of your company to the lender in the form of bonds.

This is a brilliant way to earn a huge sum of money while still attracting savvy buyers. The lack of power is the most significant disadvantage.

9. Venture debt

Though venture capital is a common and appealing source of startup financing, it often necessitates the sale of a portion of the company. That is why debt lending is so appealing because it allows you to retain your equity.

However, the largest loan lenders, banks, are somewhat cautious, and entrepreneurs don't really fall into their type of study, making debt finance impossible to come by.

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