Are you starting a new business and you need funds to grow it? Some studies proved that over 95% of new businesses fail during their first year of a start-up because of a lack of funding.
Business owners are always finding themselves asking this question – how do I raise funds to grow my business?
The question is how much funds do you need, when do you need them and where will you find them? Finding the right funding options are necessary to grow your business. In a fast-paced world where everyone has a new idea for a business, you need to stand out to encourage people or organizations to invest in your idea.
If you’re planning on raising funds for your business, then this guide will help you in finding the right options.
Raise Funds by Winning Contests
Many contests have helped a lot of businesses to increase their fundraising opportunities. It also motivates business owners with new business ideas to set up their businesses.
You have to either prepare a business plan or a product. Winning contests will also help you get media coverage, which can prove to be beneficial for you as you will make new contacts and find resources that can add value to your business.
Venture Capital for New Businesses
Venture Capital is a good option for small businesses that are beyond their early phase and are already generating revenues.
Companies who are growing fast like Uber and Flipkart etc. with the exit strategy that is already in place can gain up to millions of dollars that can be used to invest, network, and grow their business quickly.
Venture Capital looks for bigger opportunities that are more stable and who also have a strong team and good traction.
Marshland Capital is one of the prominent VC that has previously funded 3 startups. If you want money to invest or grow your business, you can count on Marshland Capital as they not only will invest money but also invest their time and vast network resources to grow your new business.
Startups like LaunchX, Bit.Country and others are leveraging the help of Marshland to set their foot in the industry and grow from scratch.
Crowdfunding is one of the best ways of raising capital and is gaining popularity these days. It’s more like pre-order, investments or contributions, or taking a loan from more people at the same time.
This is how this new way of raising capital technique works for new businesses. An owner of the business will put up all the details related to the business on the crowdfunding platform and will mention the motive and goal of the business such as how much capital the business along with how much profit is expected from the business, so investors can make an informed decision based on the provided information. Anyone can invest in the business after reading the details if it interests them.
The best thing about crowdfunding is that it helps in marketing the product alongside functioning and also generates interest.
Before crowdfunding for your business, keep in mind that it is a competitive place to raise funds for your early-stage start-ups. So, unless the idea of your business is perfect and can attract the crowd of the consumers through just a detail you provided with some pictures online, crowdfunding may not work for you.
Raise Funds from Business Accelerators and Incubators
Early-stage start-ups can count on accelerator and incubator programs to raise funds. They are found in almost every big city and help hundreds of new businesses every year.
Accelerators help a business to run and take a giant leap while incubators properly nurture the business by training and providing shelter tools and network at an early stage of the business.
They set a time limit with the owner of the business and run for 4 to 8 months. You can make good relationships with investors, mentors, and other new start-ups using the same platform like yours to grow your business.
Raise Capital through Bank Loans
Almost every business owner thinks about bank loans to raise funds for their business. Bank can provide you two types of loans; working capital loan and funding. You can choose from either of them after carefully assessing which type of plan sits well with your start-up.
Bank funding will involve the process of sharing the business’s estimation details and a plan with the complete report of the project based on which the bank sanctions the loan. On the other hand, the working capital is the type of loan that is required to run a complete cycle of income-generating operations and the limit of these operations is decided by hypothecating debtors and stocks.
Angel Investment in your Start-up
Angel investors are people who have surplus cash and a keen interest to provide cash in upcoming start-ups. They also work in network groups to collectively screen the proposals before investing. They also offer advice alongside capital.
Investors like these have previously helped many companies in their early stages including Yahoo, Alibaba, and Google. This alternative type of investing generally occurs in the early stages of business growth with investors expecting up to 30% equity. They take risks in investment for higher profits.
Bootstrapping is also known as self-funding. It is a good way of starting start-up financing. Usually, new business owners face problems getting funds without first sowing their plans and some traction for future success.
You can invest your own money from savings or can get your friends and family to contribute. This will be easy for you to raise investment due to fewer compliances/formalities plus the costs of raisings. Usually in most situations, friends and family are flexible with interest rates.
The Bottom Line
They further help early-stage companies by creating solid key partnerships to help grow their connections fast, secure their first-round investment, and help to develop new businesses to execute and develop their go-to marketing strategy.
Start your business today!