Five Best Ways to Finance Your Startup

Often in the startup ecosystem, there is no shortage of ideas or ambitions. However, there is a grave shortage of support, customer reach and most importantly, finances. Most of the startups that have brilliant ideas fail to survive in the market due to lack of funds. Finding banks that will lend you money is not an easy task and not everyone is inherently rich to have an endless reserve of cash. If you own a budding startup, this article is for you. We will discuss the 5 best ways you can source finances without any hassle and move ahead with your plans. Read on.

Best Ways to Finance Your Startup

1. Personal Savings

This is certainly the best way you can kickstart with your company without letting your ideas wait for the right moment. Rather than waiting for too long to see someone else come up with a similar idea, get started if you have a reasonable amount of personal savings to start a company. You can always keep an account of the amount you invested and take a cut out of the profits when the business has established itself and has enough funds to repay you.

2. Bank Loans

Though it is difficult to convince you to lend money, it is not impossible. Given that startups are blooming everywhere and some of them show immense potential, banks nowadays have schemes exclusively designed for startups. Find out about such schemes, provide the required collateral and furnish the necessary details. If everything goes in your favor, you will have your funds sorted at least for a brief amount of time.

3. Internal Sources

If you are really good with financial savings and management, and provided the startup is making profits right from the beginning, you can invest your earnings into subsequent stages. You can also take help of family and friends to help you out with finances and pay them back when you have gathered enough funds to manage both operations and repayment.

4. Share Capital

One of the most popular methods of financing your startup, the concept of share capital involves you selling a tiny part of your company to the investor funding your startup in return. One must ensure to retain the majority stakes with the owner alone and distribute shares/profits to investors corresponding to their respective contribution. As and when the valuation of the company grows, the value of the equity sold also grows.

5. Angel Investors

Angel investors are whom you need if you are thinking big and need big bucks to support your startup. Angel investors are experienced entrepreneurs who invest in startups like yours. In addition to the finances, the angel investors also provide their guidance, support and experience to help you steer your business towards profits and reputation. However, these investors also demand certain control over the company to ensure it is steered towards profit and reputation. The entrepreneur must be ready to lose a bit of hold on the company with the angel’s arrival.

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