Sometimes, coming with the right idea, finding the right team or even drafting the perfect business plan is not the hardest part of getting your startup up and running. The real trouble is finding the Benjamins to finance your little baby. Luckily, here are 12 steps to help you in your quest to fund your startup and make those millions!
The traditional bank life line is still an important part of business funding. However, banks loan based on historical income not projected income streams. Which makes it hard for start ups to turn to this option. (Ideas: Line of Credit, Term Loan, SBA Loan etc)
“A situation in which an entrepreneur starts a company with little capital. He or she attempts to found and build a company from personal finances or from the operating revenues of the new company. Boot strapping can be beneficial as the entrepreneur is able to maintain control over all decisions” (investopedia). Ideas: Ecommerce, Online Ad revenue, Free lancing, Contracting etc.
3. Business Incubators:
”Are programs designed to support the successful development of entrepreneurial companies through an array of business support resources and services, developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts” (Wiki). Ideas: YCombinator.
4. Business Plan Competitions:
A way to pitch your ideas for lump sum prizes, financial rewards, exposure and more. There are hundreds of business plan competitions that are conducted by governments, private companies and schools.
5. Cause Donations:
Usually targeted towards non profits or profit for a cause organizations. Social media can be used to galvanize the masses and attain Paypal donations online.
6. Crowd funding:
The future of capital infusion for business lies with crowd funding. This is still a loan with interest and stipulations but it puts you in the eye of many individuals who are now invested in your success. Ideas: Prosper.com, Lendingclub.com, Lendingtree.com.
7. Entrepreneur & Intrapreneurship Programs:
”Companies sometimes have programs that allow qualified employees time, resources and even funding to explore a business idea or technology. However, you may have to live up to certain milestones or expectations, or will likely have to turn over any inventions/ technology to the company. Entrepreneurship programs is similar to intrapreneurship programs but is not limited to employees of a company or organization” (brainz.org).
“There are many private companies and non-profits that offer small loans, up to $35,000, to promote entrepreneurship, to individuals who would not normally quality for bank financing. Examples include Patriot Express loans, and Small Office/Home Office (SOHO) loans” (Forbes.com). Ideas: Kiva.
9. Online Ad Revenue:
“This is an option that has only become available in the last few years. If you have the skills to build, promote and monetize a web site – which you can start for practically nothing – then you might profit either by selling it or using advertising or other revenue (premium content sales, subscription fees, consulting, etc.) to fund your startup” (brainz.org).
10. Scholarships & Grants:
Free money from governments and institutions are limited but is a great funding stream. However, be mindful of attached stipulations to your funds.
11. Third Party Investors:
Angel Investors, Private Equity, Venture Capital.
12. Vendor financing:
“If you need tangible products for inventory, many manufacturers and distributors can be convinced to defer your payment until the goods are sold by you. This really means an extension of the normal 30-day payment terms to a period of months or longer, depending on your credit worthiness and extra fees” (Forbes.com).
Photo Credit: The Idealist Blog