You’ve got a great startup idea. You’ve validated it. You’ve thought about your options.
You’ve made a plan and you know how much you need to really get your startup idea to the next level.
You’re at a point where you need money to get money.
Long story short, you need funding.
At some point, every startup needs some sort of funding to grow.
There are lots of ways to get the resources you need to grow your business — here are the best ones.
One of the easiest ways to get funding is by asking your friends or family. It’s the easiest because you don’t have to go through a super long process, plus, these people will almost always believe in your startup and ideas (thanks mom and dad!).
If you’re doing this, try to make it as formal as possible. In fact, write everything down. Know what you’re committing to. If your lenders are getting equity, how much are they getting? If you’re paying back, when will you do it?
Have every detail clearly laid out.
Also, consider that if anything goes wrong, you’re not only losing money, you’ll most likely lose a friend or a good relationship with a family member.
Finding an investor for your idea is the first thing most people will tell you to do if you want to grow your startup.
Investors often bring their experience running businesses to the table, so this way you can both have resources and mentorship.
However, if you’re seeking investor funding, you really need to think it through.
Once you get an investor on board, this startup is no longer only yours. This isn’t necessarily a bad thing, but, you’re now accountable to someone other than yourself. It’s a much more complicated relationship.
No matter what, remember investors will always want their money back — that’s the reason they’re investing. That pressure will always be there.
Consider that getting funding from an investor if you don’t have enough “startup” experience will be difficult. Seeking investor funding this way can turn into a discouraging and exhausting experience.
Bootstrapping your company is one of the best options if you want to grow your startup at the pace you want while keeping full control.
You can use your personal savings or even get a personal loan.
One of the biggest advantages of bootstrapping is that you don’t have anyone else to answer to but yourself. You won’t have family members asking for their money back or investors pressuring you to launch your product as soon as possible.
You’ll only have yourself and your skills.
While this can be scary for some, it won’t be for those who deeply believe in their ideas. Lots of successful companies have bootstrapped— it’s possible for you too!
You’ll learn a lot in the way and in the end, you’ll build the company you want to build, not what others expect it to be.
And, if you want to take less of a risk, keep your day job and start growing your business in your free time. You’ll get the best of both worlds!
Of course, having limited resources can mean that you’ll probably grow your startup at a slower pace. Be mindful of it.
Most startups are building services or products that are needed in the market (others are creating markets with their products, but that’s another topic). So, if you already know companies that would be interested in buying your product once you launch, get an advance payment!
If you make the right negotiation and you’ve done your numbers, you’ll get the money you need to keep developing your idea and, the best part, you’ll already have who to sell what you’re working on.
The key to this is to really know who your clients could be. For this, you can use competitive intelligence tools. They’ll help you identify who’s in your market, too.
Before using this strategy, make sure you clearly know which rules apply in your country to get this kind of funding and get everything written down on paper.
A very popular option as of lately!
Crowdfunding is similar to the last option in the sense that people are paying in advance for a product or service you’re developing. But it’s different because in this case, you’re also creating a community.
Having a community that supports your startup is key!
There are many ways you can go about crowdfunding. Some people give away equity (if you’re using a crowdfunding platform, make sure this is allowed), while others sell their products in the form of rewards. In some cases, crowdfunders simply donate their money because they believe in your idea.
Ask yourself, “how will the new financial relationship I offer to my biggest supporters enhance their lives?" There's a huge amount of emotion and story we tell ourselves before we send in money to crowdfund something. Almost none of it involves how it will help the organizer's business goals.
Engaging directly with fans and friends in this way is more about connection and the audience's role in making a difference than it is about cash.
Whatever you choose, keep in mind that a lot of companies and individuals run crowdfunding campaigns. If you want to get funding this way, you need to plan how you’ll stand out, and all the logistics behind your campaign.
Sometimes crowdfunding campaigns take more time and effort than what you can get out of them.
These places often provide facilities you wouldn’t get if you were building your business on your own: mentorships, office spaces, and sometimes funding opportunities.
It’s important that you know the difference between an accelerator and an incubator. While both support startups, they do it in different ways.
An accelerator well, accelerates. This means that it’s ideal that you already have a product, a team, and/or traction if you want to join one.
An incubator, on the other hand, can support you better if you’re in a very early stage of your startup, like when you’re creating your business plan or defining how your product will look like.
Both accelerators and incubators are great not only because you can get funds, but because you can connect with other like-minded people, find mentorship, and get your idea out there.
Joining them also means that you’re giving away part of your company. Of course, you can also pay to be part of their programs, but in this case, you’re looking for funding.
Another disadvantage is that a lot of startups want to join these programs, so sometimes it’s really difficult to join.
Finally, make sure you read all about the accelerator or incubator program you want to join. There are many options, but not all of them have the same quality or expertise you’re looking for.
Getting money without having to pay it back? You can, with a grant.
There are tons of grants given to startups and small businesses! Grants are offered by lots of governments, companies, and organizations.
Grants are given for specific purposes, like upgrading your equipment, growing your team, surviving crises, etc.
Before applying, find out what the requirements are and if you’ll be able to use the grant for that purpose.
If you spend the money on something different, you’ll have to give it back. In some places, you can even be accused of fraud. Be aware of that!
Getting a grant is super beneficial for a business and that’s the reason a lot apply. The result? It’s very difficult to get one.
Of course, you can try but if you’re relying solely on getting a grant to grow your startup, then it might take too long!
Nobody will knock at your door or send you an email saying that your idea is awesome and that they want to give you money. Nobody.
So, just like with every other moving piece of your startup, you need to get out and look for it.
It doesn’t matter which strategy you use, you’ll need to put effort into it.
The good news is that, just like with every other moving part of your business, you can get as creative and resourceful as possible.
Getting funding is just another part of the startup journey, don’t be afraid of it!