Many innovative ideas out there haven’t managed to make it in the business world simply because they couldn’t get enough capital to get off the ground. Fundraising is challenging, but when you know where to look and how to make options work for your business, finding the best opportunities can be easier than you think. Hiruy Amanuel shares seven ways to secure fundraising for your startup that don’t require lending services like banks.
1. Angel Investors
Finding the right angel investor can make all the difference for your startup’s cash flow. However, it’s a process that can take a fair amount of time. Because angel investors frequently like to be highly involved with the company, including a significant equity stake, you must ensure it’s a perfect match.
2. Venture Capitalists
Unlike angel investors, venture capitalists typically look to invest more money in their next startup choice and not be as involved in the process. Most venture capitalists are looking for rapid growth and high returns, so you need to be prepared to provide them just that. If your business isn’t ready for those high demands, you may be better off waiting and use other fundraising methods for now.
Incubators and accelerators are great ways to network with other startups and find ways to cut costs via shared workspace and business training and advice. Many incubators/accelerators associated with universities and organizations can also provide funding to startups they think have potential. This funding is dependent on an equity stake for the school or organization, so make sure you fully understand the legal terms and conditions when partnering with an established group.
This newer form of fundraising can be an excellent way to get your product out there and receive feedback without having to give up a stake in your business. Of course, there are legal aspects of the process to note. Still, by providing individuals with some sort of incentive in exchange for monetary support, no matter how small, there is potential to increase your fundraising at a time when you need it most.
5. Small Business Grants
While it may be a more traditional form of funding, applying for small business grants is still an effective way to get financial support. Grants can come from government or private organizations and are usually more prevalent in education, medicine, and renewable energy. It might take you some time to find applicable grants for your startup, but many have no application fees and a surprisingly small number of applicants.
If you want to go really old school with your fundraising, take money out of the equation altogether and see if you can barter your way to financial success. It may be as basic as offering support services to another company in exchange for rent-free office space and equipment. By creating win-win situations, you’ll save your startup money and give it more time to grow.
7. Finding a Major Customer
Sometimes all it takes is that one ideal customer or company to back you, and your funding worries will disappear. They will likely have conditions to the partnership, such as distribution rights, a white-label agreement, or an early licensing deal, but it will allow your startup to succeed with support.
About Hiruy Amanuel
Hiruy Amanuel is a technology expert and a devoted philanthropist. He has invested in various initiatives for educational and technological advancements in East Africa. Amanuel believes that there will be quick development of groundbreaking technologies throughout the Horn of Africa as access to quality education and technology increases…