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A Few Innovative Options of Fundraising for Your Startup

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Arun Kumar
Los Angeles
California 90210 
United States

Establishing a startup business from scratch is an exciting affair, which many youngsters dream of, but the acquisition of required funds to build your business is the real challenge. Most of them who jump into startup businesses don’t do enough groundwork to identify where one should start and how to raise funds. Improper or unrealistic planning is one major reason why many startups tend to fail over time.

For those who are planning to raise funds to have various options now ranging from conventional business loans to marketplace investors, angel investors for startups, crowdfunding, online loans, etc. to mention a few. Altogether, it is much easier to raise funds now than ever before if you have a smart business idea in mind. In this article, we are trying to discuss in-depth about a few of the top fundraising avenues for startup entrepreneurs to explore.

Smart ways for startup funding

1. Funding your idea

This method is ideal and commonly used by startups in their early stages of development. The founders or team members will put their shares together to invest in an innovative startup idea. Professional investors tend to prefer this mode of fundraising over others. To do this; however, you need to have some assets or savings which could be used for this purpose.

Funding for your startup is the most positive way of sharing the message to future investors as to how serious and confident you are about your idea. Putting your own money into a startup business shows that you have done enough groundwork to risk your hard-earned money and have full faith in your company.

There are many other advantages too for funding your idea, which many other fundraising avenues don’t have. If you do self-funding for your business, then you can have full control over the business. With other modes of fundraising, you may have to give off the equity shares for availing debts, which may have some impact at the baseline.

2. Crowdfunding platforms

Crowdfunding is a comparatively new concept in business fundraising, and there are many modes of crowdfunding available lately. This has to be availed cautiously, and you need first to select the right mode of crowdfunding to try out and should do enough homework before getting into it. There are equity-based and rewards-based crowdfunding etc. Along with business startups, crowdfunding is also used for artistic projects and also social cause initiatives to raise capital.

Any of the fundraising options you choose in crowdfunding may have a lower risk if you put your product into the market and then try to get funds to finance for it once it’s made a reality. This approach is also advantageous for getting feedback from the early customers about your product or prototypes. The investors may be able to check the marketplace adoption of your products if you want to opt for crowdfunding.

As points out, if the potential investors start to notice that others are interested in investing in your idea, more will be persuaded to put money on you. Many of the new-generation business startups now adopt crowdfunding to avoid censorship and enjoy maximum freedom at work.

3. Angel investors

Angel investors also popped up as a new community of business investors, especially after the ABC show named Shark Tank. In the highly competitive world of entrepreneurship, startups not only need funds to raise capital but also proper mentorship and expert guidelines to be on the right track for growth. In general, angel investors used to invest up to one 1 million on bright ideas, and in-comes cases, there could be more than one angel investors who come together and fund for something.

Reaching to the right angel investors is not a difficult task now with plenty of online platforms available for this. However, you need to be very careful and informative while doing it. It is ideal to be a part of the investment networks to reach to potential angels and then engage with them through social media like Linked-in groups, blogs, and websites, etc.

You have the scope of presenting your business ideas and plan through online platforms for angel investments to get an expression of interest from the potential investors. The investors may express their interest to listen to your idea, clarify their doubts, and may also give you reviews and feedback about your products and services. The more you get engaged on these platforms, the better the chances are there to get more investors.

However, you should be very careful while availing angel investment into your business as some of them may want returns instantly and may also want to take more control of your business than you can afford. So it is always advisable to identify angel investor/s who are working in the same line and can understand your business plan better. It will be good if the investors have expertise in your domain and know the target market. Domain expert angel investors can be your ideal mentors too as they want you to succeed by putting their money on to your ideas.

4. Family and friends

This is one investment avenue any new entrepreneur may explore at the first point to try and raise funds from their close circle of people who trust and love them. It may be your family and friends who are aware of your talents, aspirations and drive to support you unconditionally. However, even when they trust you, you need to honor their investments and work towards providing them appropriate returns.

Even though borrowing from friends and family may be a great idea, it has its drawbacks too. For those who need expert guidance and mentoring for their business, family and friends may not support as like how angel investors and other expert investors do. In fact, a part of the fund can be surely raised from the close circle, where on a long-run, you may have to look for more serious investors.

Here, what we have discussed is a few out of the box ways for business fundraising, whereas you have the conventional fundraising options always exist like business loans by banks and government agencies, private business leaders, venture capitalists, etc. All that you need to do is to do a thorough evaluation and choose the most matching fundraising options for your startup.

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