Every year, well over 600,000 startup companies attempt to set up shop throughout the U.S. All of the owners of these startups believe that they have what it takes to build a successful brand from the ground up.
Unfortunately, not all of them last for very long. About 20% shut down within their first year, and by year five, almost 50% of them are gone.
In some cases, these companies close because they don’t drum up as much business as they thought they would. But in others, it’s a lack of startup funding that leads to their demise.
Want to make sure that your startup doesn’t fall victim to this? Then before you even think about creating a new company, you should learn how to fund your startup so that it has every chance to succeed.
Here are some of the top ways to go about getting funding for a business that’s just getting its start.
Dip Into Your Own Pockets
When you’re starting up a new company, one of your goals should be to try and retain as much of the company as you can so that you’ll strike it rich if it blows up. The last thing you want to do is start divvying up your company and giving percentages to other people who are going to gobble into your profits.
With this in mind, you might want to think about the possibility of you providing your own startup funding for yourself. You can do this by sinking some of your own savings into your startup company if you happen to have it handy.
This is obviously not going to be an option for everyone. There are plenty of people out there who don’t have tens of thousands of dollars to spare.
But if you have a healthy amount of money stashed away in the bank and you really believe in your business, then why not invest in your own startup and keep ownership of 100% of it? The only way to do this is by putting up your money to jumpstart your business startup.
Ask Family Members and/or Friends to Invest in You
If you don’t have enough money in the bank to finance your own company, it’ll be imperative for you to look elsewhere for startup funding. One good place to start would be to see if you have any family members and/or friends who want to invest in you and your new business venture.
Generally speaking, it’s not a great idea for you to borrow money from family members and/or friends under normal circumstances. But if you’re doing it in exchange for a stake in your company, it’ll be a different story. They’ll stand to make some money—and potentially, a lot of money—by sending startup funding in your direction.
Sit down with your family members and/or friends and discuss having them invest in your new business. Have a business plan that you’re ready to show them and prepare to answer any questions they might have.
Your family members and/or friends might not be able to lend a helping hand to you. If this turns out to be the case, don’t take it personally. But it never hurts to ask those closest to you when you’re in need of assistance.
Consider Kickstarting a Crowdfunding Campaign
Is your startup company going to sell an amazing product or service that you think people might love? That might be reason enough to try and launch a crowdfunding campaign for your business.
A crowdfunding campaign will call for you to promise to provide people with a product or service in the future in exchange for a financial contribution right now. You can use the money that you’re able to make through a crowdfunding campaign to push your company’s product or service forward so that you can start dishing it out to people.
Your goal when starting a crowdfunding campaign is going to be to generate a lot of buzz about your company’s product or service. It’s why you need to make sure that you have something that’s going to get people excited when they hear about it.
See If a Bank Will Provide You With a Loan
If you’re trying to figure out how to fund your business and the first three options listed here don’t get you anywhere, it’ll be time to take a more serious approach to obtaining the startup funding you need. You’ll want to begin by contacting one or two banks in your area to see if they might consider floating you a business loan.
A word of warning: It’s not going to be easy to lock down a business loan from a bank if you don’t have much in terms of assets. Since there are so many new businesses opening up every year, banks are usually pretty selective as far as who they choose to lend money to.
But it would be worth looking into whether or not you qualify for a loan through a bank in your area. Depending on how much money you need to borrow, they might be willing to roll the dice on you.
Turn to Business Funding Specialists for Help
Many banks are a little gunshy these days when it comes to handing out loans to new companies. But the good news is that, as a result of this, there are a whole bunch of business funding specialists that have opened up throughout the country to meet the needs of startup owners.
If getting a loan through a bank doesn’t work out for you, you should think about trying to work with one of these specialists to get the money that you need. To do it, all you’ll need to do is:
- Fill out an application
- Take a look at the lenders that will consider working with you
- Speak with lenders about what your startup funding needs are
- Provide more information about your startup
- See if you’re approved for funding through one of these lenders
The great thing about going this route when looking for startup funding is that you can apply for loans through a handful of lenders at one time. It’ll cut down on the amount of work that you have to do to secure a loan.
Make Pitches to Angel Investors
There are more than 600 billionaires in the U.S. at the moment. There are also thousands of other people who are steadily approaching the billion-dollar mark and looking for ways to get there faster.
One of the ways that people go from being millionaires to billionaires is by becoming angel investors. Angel investors are high-worth individuals who invest their money into up-and-coming companies in the hopes and making millions of dollars in return.
If you have any angel investors operating in your area, it would be wise to give them a call to see if they would be willing to hear a pitch from you and your startup. It would also be wise to carefully craft the perfect pitch to improve your chances of landing an angel investor willing to invest in you.
When you accept startup funding from an angel investor, you will have to give them a percentage of your company. But it’ll often be worth it for those who need a cash infusion quickly to get their business to grow.
Try to Drum Up Interest Among Venture Capital Investors
There’s a good chance that you’re not going to be able to generate much interest among venture capitalist investors if you have a brand-new company that doesn’t have much in terms of sales yet. But if your company appears as though it’s poised to grow in the months and years to come based on past sales, venture capitalist investors might be interested in speaking with you.
These investors specialize in seeking out startup companies that are on the rise and giving them the startup funding that they need to take things to the next level. They’re an excellent option for companies that have a proven track record in their industry during their first couple of years in business.
You’re going to need to have a very strong pitch to sell venture capitalist investors on your startup. But as long as you believe in what you’re doing and have a clear plan for how your company is going to grow moving forward, you could provide these investors with enough information to write you a check.
Get the Startup Funding You Need Today
Your startup company isn’t going to be able to stick around for very long without the necessary startup funding. You need to make securing funding a top priority right from the start.
You can fund a startup in any of the ways that we just mentioned. You can also consider combining several different ways to get the funding you need.
Don’t stop until you’re able to get funding for your company. The future of your startup business is going to depend on it.
Browse through the articles found on our blog to get more great advice for startup owners.