Jodie Fox, a global entrepreneur who co-founded Shoes of Prey, said this about funding:
“When looking for funding, don’t just look for cash. Look for the right people.”
That seems easier said than done, right?
When entrepreneurs are in the midst of starting a new business, finances and funding are often major stress factors.
However, it doesn’t have to be.
Finding funding for your startup provides more than just cash, but also networking opportunities and the chance of developing relationships with people who add value to your business.
In this article we will be addressing the following 10 Sources of Startup Funding:
- Use Your Personal Savings
- Apply for a Personal Business Loan
- Apply for a Small Business Grant
- SBA Microloans
- Find a Partner
- Find an Angel Investors
- Find a Venture Capitalist
- Join an Incubator or Accelerator
- Create a Crowdfunding Campaign
- Participate in Pitch Competitions
1. Personal Savings
The most common source of startup funding actually comes from an entrepreneur’s personal savings account. This is the easiest and quickest way to fund a startup; however, most personal savings are not enough to cover all costs involved in starting a business.
Using personal savings has advantages including saving time and money when applying for loans and payback fees involved while still keeping all business equity.
Most of the time, however, personal savings won’t be enough to start or scale-up which is why people use the leverage from loans.
2. Apply For a Personal Business Loan
Business loans are a great way to leverage the start or scale up of a business. A quick search on the internet will yield hundreds of different lender entities that offer small business or personal loans.
The best way to decide on what loans fit your business needs best is by doing your research and comparing different payback interest rates and other benefits these entities may offer.
By doing this, you can make sure you are making the most informed decision.
3. Apply for a Small Business Grant
Grants offer a great advantage since most don’t require any payback.
Grants are available for any small business owner and entrepreneur.
One of the most popular entities is the Small Business Administration (SBA), a federally funded group that helps small business owners find grants across the United States.
The SBA also has funding programs for those that qualify.
4. SBA Microloans
If you cannot find the appropriate funding through the SBA grant program, microloans can be a viable option as they can provide up to a $50,000 loan for small businesses that qualify.
5. Find a Partner
A partner is a great way to bring additional funding to your business and expand its growth potential.
This, however, usually involves splitting business equity and responsibilities. In addition to the funding opportunities, finding a good partner can add intrinsic value to your business coming from experience, ideas, and connections.
Learn what 5 Things to Look for in a Business Partner
6. Find Angel Investors
Angel investors provide funding usually in exchange for equity or ownership of the business.
Angel investors differ from venture capitalists in that they invest their own money, while venture capitalists are employees of a venture capitalist firm and usually invest other people’s money.
7. Find a Venture Capitalist
Every venture capitalist is different and specializes in different areas. They are also very particular about what kind of business they provide funding to and usually invest in those who have an exit strategy such as being acquired by another company or going public.
Research and create a list of venture capital firms that have a track record of investing in similar companies like yours and that may be a good fit for you.
8. Find a Startup Incubator or Accelerator
Accelerators and incubators, although often used interchangeably, exist with different purposes.
An incubator is intended to teach and help an entrepreneur get their business off the ground, while accelerators foster the growth and scale up a business.
Overall they will both provide different resources startups can benefit from. In order to find the right one, you need to identify your business’ needs.
9. Create a Crowdfunding Campaign
Crowdfunding raises capital collectively from a large group of people who contribute small to moderate amounts of money to fund a business.
There are different types of crowdfunding including debt crowdfunding, reward crowdfunding and loan crowdfunding.
10. Participate in Pitch Competitions
The TV Show, Shark Tank, is probably the first thing that comes to mind when thinking about pitch competitions.
Although this is the most popular pitch competition you can think of, the chances of getting on a TV show for funding are slim.
However, there are many similar pitch competitions happening all over the US that not only provide a better chance of funding and mentorship but also provide great networking opportunities.
The best way to prepare for a pitch competition is to practice both your pitch deck and elevator pitch, as you won’t just be pitching to judges, but will also be able to share your business with other entrepreneurs.
Pitch Your Startup at the Next CoLab INC Pitch Competition
About Raitchele Cornett
Raitchele (Hi-Chel-Ee) is from Curitba, Brazil, and grew up around entrepreneurs and business moguls.
Raitchele is a Boise State Alum and MBA Student with a passion for entrepreneurship.