One major challenge facing business establishment or entrepreneurship is how to go about fundraising for startups. If there’s one question aspiring entrepreneurs or business owners usually asks, It is, how do I raise funds for a startup?
Sometimes the idea, skill, and products might be available, but the finances are unavailable. What should be done? Do not worry; this article will systematically guide you on several ways and processes of fundraising for startups.
Before going forward, I’d like to say that “this article” is for those who have a product, skill or idea to offer.
These are not methods for rich quick funds or Ponzi schemes, So if you have a skill or product without the funds to initiate your ideas, let’s go on a ride.
10 Easy Methods for Fundraising for Startups
There are various methods of raising funds for a business startup, but I’ll mention ten easy and effective ones here.
Bootstrapping, also known as personal funding, Is a proven and efficient strategy for fundraising for startups.
It involves funding a business by oneself, perhaps through personal savings, selling off assets or initial sales (for already established businesses).
It has a very high advantage because there’ll be no form of extensive authority, but it is only effective when the funds required for the startup are not much.
F² _ family and friends
One’s inner circle can play a significant role in fundraising for startups. Acquiring funds from family, friends, and relatives is relatively easier due to the level of intimacy. However, it is advisable to enunciate all the terms and conditions to avoid future grudges.
Angel investors/Super angels
Angel investors are individuals who have interest and also the cash to finance a business. They usually own a share in the total asset of the business.
Angel investors are an effective fundraising method for startups in businesses because, in most cases, they are highly experienced and knowledgeable.
Government or entrepreneurship programs
The government would usually establish programs for financing or providing funds for startups.
Many NGOs perform similar functions to that of the government by providing funds for business, either already established businesses or potential ones so far you have an innovative idea, skill or products.
Examples of NGOs who provide funds for business startups in Nigeria are Tony Elumelu entrepreneurship program, YouWin Connect Nigeria, Grofin fund and many more.
The funds provided during these programs are often not repaid and are usually a huge amount.
Various banking institutions provide financial loans for businesses. A percentage is usually returned to the bank per the agreed time.
It is a tested and trusted strategy of fundraising for startups in businesses. However, one must possess a valid and convincing business plan to acquire a loan from the bank.
Many do not know that they could raise funds for their business startup in their existing workplace, religious centre, community or even a relaxation centre.
Crowdfunding involves acquiring money from several individuals (crowd) to finance or fund a business.
It is an effective way of raising funds so far; you inform them about the outcome, incentive and gain associated with funding your business or idea.
Crowdfunding could be from relatives, work colleagues, religious colleagues, neighbours, friends, etc.
There are a lot of individuals out there who share the same interest as you but do not have as much knowledge as you do.
Yours is to find an individual like that, and an agreed, or equal percentage of the business will belong to the partner.
Most times, business partners have little or no knowledge about a business but usually are a great means of fundraising for startups, especially if you have a great business idea.
By participating and winning a contest
In this case, you’ll have to participate in a contest or competition with other aspirants like you. Emerging the winner will give you access to the cash price, which can be used to fund your business.
This method is most common in the tech sector, in which you’re expected to create something unique.
Business incubator / Business accelerator
Just like incubation in human terms, business incubation refers to the nurturing of a younger business, usually a startup, till they’re capable of surviving by themselves.
Business accelerators assist in jump-starting and fast-forwarding an already established business, usually a small-scaled one.
This is an effective way of acquiring funds for your business startup since the incubator/accelerators will be providing you with majorly everything needed.
Crowdfunding through platforms
In this case, you receive funds from various people worldwide through platforms. You’ll be required to make a campaign for your products, ideas or skill.
Thousands of people can invest in your business if it looks attractive and convincing. There are many fundraising platforms worldwide, but I’ll be mentioning a few trusted ones.
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Fundraising Platforms for Business Startups
This is one of the best business fundraising platforms worldwide, which you can use to raise funds for your business, products or even ideas.
There are two methods of raising funds on this platform; fixed funding and flexible funding. In the fixed funding, a particular range of amount is set by you and must be met by the investors; if not met, the existing money would be sent back to the owners.
This method is effective for those who require a specific amount of funds for their startups.
You set limited funding, a range of amounts, and it’s not compulsory to be met by the investors; any amount acquired would be sent to you.
Other fundraising platforms for business startups
- Gofund me
- Seed invest technology
- Start engine
After knowing which source to acquire funds for your business startup, some processes should not be neglected.
Processes Involved in Fundraising for Startups
- Build a product/Have the right skill
- Have a convincing business plan
- Choose the right source for raising funds
- Network through social media platforms to acquire information.
- Always enhance your products or skills.
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My name is Onileowo victor, and I am a content writer, storyteller, and fiction writer.
I use simple but attention-catching words to carve out my content, thus making it consumable by my audience.