According to a recent study, 82% of the new startup businesses fail in the first five years of operating because of the lack of funding. Lack of startup funding might not be the primary reason but it is one f the reasons for their failure. Money is an integral part of any startup. If you think your business has the potential to generate good revenue you will have to fuel it with the same first and then only you get your results. It is not a one-time thing but it is needed at every stage. Entrepreneurs have to sort themselves for the kind of investment at what stage of their entrepreneurial journey.
Once you know what kind of funding you need at what stage, you are all set to get yourself a successful business. Here are the top 4 ways to get yourself funds at different stages of your business.
Crowdfunding- The Recent Addition to Kinds of Funding
If you look at the very basic level of this concept, it is pretty much similar to the concept of mutual funds. The entrepreneur is supposed to pitch multiple investors at the same time through crowdfunding platforms. This option gives you the benefit of receiving comparatively smaller funds from different investors at the same time. Based on your business idea, goal, plan of action, and plans of earning profits out of it, investors shortlist your pitch.
Crowdfunding is one of the ways through which a startup investment platform could help a bunch of startups with a fixed amount of funding. This is not just one reason why it is getting famous but there is one more reason for it. It gives surety to the entrepreneurs that their idea is trusted by other investors. It further gives them the determination to do their research well. From the idea stage to getting investment this boosts the morale of every entrepreneur.
Self-funding for your startup funding
The practice of funding your business on your own is also called bootstrapping. It is one of the ways that you can add to your pitch while you want investment in the later stages of your business. This is what you can do when convincing other investors becomes a big deal at the initial stages of your journey. The initial stages are whatsoever easy to fund on your own. Keep your day job and fund your idea for the very beginning stages of it. You can use it to bait investors into funding your business.
If you know the requirements of your business are low, it is easy for you to earn yourself your business funding. Furthermore, you stay your own boss till the time you do not seek funding support from any investors. This also allows you to keep a track of your growth. You will know where did your money go.
Seeking Financial Support From Venture Capitalists
If you want to get a sure success at your business then VCs are the answer for that. They offer you professionally handled funds but they look for potential candidates. This is hard to get but the professionalism and the guidance you would get from VCs is nowhere to be found. Out of 100 pitches that Venture Capital Firms get they shortlist 50 of them and then fund only 5 of them. So you should know you need to do your research well. They usually invest in equity and eave at the stage when the business is either acquired or is released to IPO.
They look for quite a lot of things in a potential candidate- Dynamic market opportunity, team’s execution capability, commercial traction, the X factor, and the passionate entrepreneur. Just make sure that once you accept their funding, feel free to access the expertise they have to provide you with.
Angel investment from Wealthy Individuals
You can try angel investment from wealthy individuals who are invested in helping potential startups. They are certain individuals with surplus wealth to invest in. you can find them either working alone or working in groups. They need to know that your startup will be the one worthy of their huge investment. Therefore, you need to make sure your pitch gets them in one go. In return for 30% equity, they want to know that your business would give them the return they are expecting.
This is a matter of fact that they might not provide you with a huge investment like VCs but they expect higher interest or return on the investment they make. Not to mention that huge companies like Facebook, Alibaba are the results of angel investment.
Funding is needed in almost every stage of the entrepreneurial journey. The Government of India has certain schemes like Startup India to encourage founding for the startups in India. This is one of the ways in how startups in India get benefits. Entrepreneurs need to know what type of funding is needed at what stage of the business