How to Raise Funds for Your Start-up

How to Raise Funds for Your Start-up

All right, you have a ground-breaking idea but not the capital to make it soar. Raising funds to kickstart your own business is one of the most common challenges facing entrepreneurs. How do you raise funds for your start-up business? Who do you need to speak to? Is there a secret recipe? To give you a little bit of inspiration, we list some of the tried and tested ways that entrepreneurs like you use to fund their ventures.

blog-post-image

1. Crowdfunding

Crowdfunding is perhaps one of the most popular and handy ways to raise the funds you need to jumpstart your business. Emerging as the main source of funds for digital projects between 2099 and 2015, thanks to the spectacular rise of DApp projects, crowdfunding continues to be entrepreneurs' first choice, especially in the tech world. This is also because crowdfunding sites are relatively easy to use. The added benefit of this funding method is that you can harness the power of the internet to attract investors from all over the world - as long as you create a killer pitch that conveys your proposal clearly and in an engaging manner. Check out our article on how to create a head-turning pitch.

You can also ask your family and friends to help you with your crowdfunding since they already know how committed you are to your project.

2. Angel investing

Angel investors can provide sufficient capital to fuel your business in exchange for convertible bonds or shares in your company (once it goes public). Some of the biggest names in tech today like Yahoo, Google and Facebook were funded by angel investors. Since we previously spoke about angel investors, we invite you to return to our article for a refresher.

3. Venture capital

Venture capitalists also funnel significant amounts into young businesses with high growth potential. They often take the lead in the second funding round, when the company will have already mustered some resources to develop its products and needs a boost to continue its research and development work.

Sometimes, venture capitalists may step in even at the early stages of development. Regardless of the stage on your start-up's journey, you attract venture capitalists' contribution, it usually comes with high-performance requirements from your side as an entrepreneur. While venture capitalists don't expect to be given any equity ownership like angel investors, they do expect high returns. Therefore, you must have a very well-thought-out business plan before you reach out to venture capitalists.

4. Bootstrapping

If you're not ready to surrender any portion of your equity and wish to keep your books away from the scrutinizing eyes of venture capitalists, bootstrapping is a great way to raise the capital you need for your young business. As the name suggestively points out, bootstrapping is a method that requires using your own resources- e.g., pulling cash out of your savings account or mortgaging some of your assets.

5. Small business loans

Speaking of mortgage and debt, securing a microloan for your business can also prove beneficial in the long run. In general, loans are one of the most sought-after business funding options, with 43% of businesses applying for a small business loan in 2021.

6. Small Business Administration (SBA)

Government programs such as the SEIS and EIS in the UK are worth exploring- considering the recent tax relaxation for emerging businesses in the country. 3,455 applications for EIS were received between 2021 and 2022 in the UK, of which 2,510 or 73% received approval, while 2,760 SEIS applications were received in the same period, of which 1,970 or 72% were approved. Despite the looming recession and rising inflation, these numbers show that the British business sector is still strong and there is plenty of room for growth.

How to raise funds for a growing start-up

If you want to muster the funds to grow your start-up business, we have just the right options for that:

7. Pre-sales

Offer your clients the possibility to pre-order products before they hit the market. Not only will it give you visibility but will also help you win over a few clients before the big launch.

8. Competitions

If you're running a creative business, participating in competitions is an intelligent way to raise the funds to jumpstart your venture. Coming with few to no conditions at all, business competitions encourage you to put yourself out there and roll with the creative flow.

9. Partnerships

Strength is in the numbers. Partnering with key players in your industry- from suppliers to distributors and technology providers that complement your offering - can propel your business to the top.

10. Incubator and accelerator programs

Start-up incubator and accelerator programs are designed to offer emerging businesses seamless access to resources, funds, and the guidance they need to grow. Incubators and accelerators support businesses more than just financially, they also provide mentorship and leadership/entrepreneurship training, as well as network building.

Raising funds with Fundmypitch

Securing a business loan or building a network of investors all by yourself may take months and months. But with Fundmypitch, you gain access to a slew of tailored resources and mentorship to help you navigate entrepreneurship with confidence. More than that, depending on where you are on your journey, we connect you to investors looking for portfolio diversification. Just drop us an email, we’d like to learn more about your projects.