How to Get Funds for a Startup 101

W e’ve all had days where we’ve sat up in bed with our incredible ideas only to slip back in when we remember how much all of it will cost. It seems to be the end of all great plans. It is absolutely essential to acquire some capital before you can act on your idea. Here's a simple guide on how to get funds for a startup. 

Self-Funding 

This may seem like an impossibly drab task but while you’re saving your money, and pinching pennies, remember this is an investment for your future. The more you are able to save, the faster your plans may be able to advance.

This is also a good way to prove to future investors that you are serious about your startup and are willing to take risks. It's a very comfortable arrangement as it's your own money and you won't have any pressure from the other side. 

Friends and Family 

If a family member is willing to invest in your idea, that’s great! But stand guard, this is a very slippery slope and can ruin relationships. You need to make sure it is a close friend or family that trusts you to loan you some money and understands the risks it comes with. However, it will be better if you have legal counsel when getting loans from a close one, so neither of you end up encountering a problem.

Public Support  

If you are good at social media or advertising your ideas, you may be able to get the public to fund your startup through Gofundme or Kickstarter and other similar services. However for this to be truly effective you need to create quite a buzz which, in the end, only comes from time and luck more than anything since both things can only be controlled to an extent. However, if this works, you will achieve a very loyal line of investors and consumers.

Bank Loans

Of course getting a business loan from the bank is the fastest way to acquire funding, however, it is not the easiest to get and it can possibly put you in debt. Since the bank will not settle with just a business idea, you need to prepare a thorough, long-term plan as banks are known to be careful loaning to startup companies. 

Government Grants 

Now this may work but the competition is very high. To be accepted for a government grant you will have to show your innovation and how your ideas will positively affect the world. As I said, the competition is very high so you need to be confident that you can beat every other idea with your innovation. However, it is not guaranteed that if you win the grant, it will be able to fund your startup and cover all your expenses. Along with that you never know if you're going to win it or not, in this case a local contest may be better. As there will be less competition and it will be a way to show possible investors of your ideas. 

Getting funds for your startup is a very integral part of starting a business, but it can be tough to do so. There are many ways you can get funds, however and you can explore several avenues to pursue your passion.

To sum it up, you can save money yourself, even though it might be tough. You can also borrow money from a loved one but make sure this person understands how it all works and you have legal help if you're talking about loans. If you're good at using social media you can make your project go big and have your audience fund you however you need to go big enough that money starts flowing in, which proves to be something that only depends on luck. 

Not to mention, you can get a loan from the bank but banks are famously cautious when loaning to a startup so you need to be very prepared and know everything about your idea for them to be able to loan to you. And then there's government grants. If you think your idea is innovative enough then you should apply. However, for less competition you should instead apply for local contests. Hope our guide on how to get funds for a startup helps aid your next big idea!

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