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Startup Funding 101 – Your Next Big Step

 

It all starts with a Vision. Two friends sitting in a tea stall with a cuppa tea and smoke in their hands. Brainstorming about the next big thing.  An idea to disrupt the current market. An idea never heard before.

You are working hard to pull it off. By now you have decided on the perfect name and have designed the logo. You work out the concept and shape it well. Now you are ready for launch. You do all the paperwork and register your brand to incorporate your company. Now you are ready to step into the world of business. So what do you do next?

You Survive

You keep your company running and your employees motivated. But how do you do that with the little amount of money you have left? You have already spent most of the money on your project and now you are running short on capital.

Business is growing fast and you need to scale it quickly. You need money to keep going. But who on earth will come up with a bag full of money for you?

Relax. There are certain ways you can get money to keep your business running.

CrowdFunding – The Easy Start

crowdfunding startup

Crowdfunding is a method of raising capital through the collective effort of friends, family, customers, and individual investors. It is the easiest way of getting money for your business. If your idea is really unique or maybe your product is worth investing in, you will find people who are interested to fund you a small amount.

Crowdfunding is basically many people collectively putting a small amount of money into your business. Nowadays it became easier for entrepreneurs as they can access the vast network of people through social media. There are also specific websites for crowdfunding where people can contribute a small amount to your idea in exchange for some product.

Angel Investor – Your Angel in Need 

Angel Investors for small startup

Angel Investors are people who are interested in your idea and are willing to take a risk. They have seen your passion for your company and now they want to invest in it. When you first launch a startup it is really difficult to collect cash from some venture capitalists.

Most of the VCs don’t fund small startups that are just starting out. They look for companies that will grow quickly and give them a quick return on their investment. On the other hand angel investors is a bit laid back. So most startups look for an angel who can help them out by growing their business.

Angel investors can either be an individual or groups of individuals who use their own personal money to finance startups. They are mostly interested in your idea and think that it has the potential to grow big.

Most of the time it could be among your friends and family who are willing to invest. Or some entrepreneur with a lot of money who once started out like you and made it big in the market by selling his/her company. They are mostly wealthy individuals who are interested in investing in upcoming companies.

This funding round is called Seed FundingNowadays it became easier for startups to collect seed funding from various sources. There are so many online sites that help you collect fundings in exchange for equity in your company.

Venture Capitalists – The Sharks in the Sea

venture capitalist

Venture capitalists are investors who provide capital to startups or small companies exhibiting high growth potential in exchange for an equity stake.

A Venture Capital firm is an investment firm consisting of prominent VCs who are willing to invest their money in new ventures and would like to work with it to make it big. They are designated investors with a good portfolio.

Venture capitalists focus on investing in startups that are believed to have long-term growth potential so that they can hopefully tenfold their returns on investment.

Unlike angel investors, VCs have more control over the companies that they invest in. They will have voting rights and might have board seats. They can have an influence on company decisions and can hire and fire executives. VCs also invest a significant amount of money in a startup than angel investors. Not just money but also time.

Most VCs own a large share of the company. Sometimes they can even fire the entrepreneur as the CEO if they think he/she is not a good fit. Venture Capitalists can bring tremendous value to your company and can be a great partner to work with.

They have the same vision as you and want to take your company to a new height. They are actively engaged with the company as they have put a large amount of money into it.


Now it’s time to grow your company. You will have to decide what sort of investment you are looking for. If you are a small company that requires a good amount of money to carry on then you should go for seed funding to have steady growth and it will give you enough time to scale your business. But if you have already completed a funding round and want to go big on the next one you should consider Series Funding.  There are many factors you should take into consideration when looking for business funding. Now you will have to decide what is best for the growth of your company.

Good Luck making money

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