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Market Oracle FREE Newsletter


Ways to Find Startup Capital

Companies / Debt & Loans Feb 23, 2020 - 01:59 PM GMT

By: Submissions


The oxygen of a startup is capital. Oxygen is needed by the body, but breathing pure oxygen can end up killing you, and this is why it is important to find the right mix of funding elements to make sure the business has the best chance of success. The new business needs funding sources to get off the ground. The model of the business will determine the cost, but the average cost for a small business is about $10,000 according to Inuit QuickBooks while a survey done in 2009 by Ewing Marion Kauffman Foundation puts it at about $31,000.

The good thing is there are different ways of funding your startup, and it is a good idea to get it from different sources instead of having all your eggs in one basket. The same way investors keep a diversified portfolio so they don’t have everything in a few stocks is the same approach that startup founders should approach their funding. When one of them has problems, they still have other options to rely on.

There is no guarantee of success because you have diversified funding – it is just one of the many factors that will determine whether you succeed or fail. There are things you need to always keep in mind when it comes to sources you can turn to.

1. Beginning with yourself
You don’t need venture capital to get the business started. The three co-founders of GitHub chipped in to launch the business, and they worked during the weekends on the business because it was their side hustle, and they did it until the business became their full-time work. Today, the company has over 3.4 million developers using its platform. By using your savings, credit cards and Qik car title loans, you can start your company. When you have your money invested, it shows others that you are serious and committed. Many lending programs by Small Business Administration will require the founders to invest their money before offering loans.

If you have no significant savings, then you should consider borrowing, but one thing to keep in mind is debt financing terms are usually more expensive for younger companies. If you are considering putting the expenses on the credit card, then you should go with one offering 0% for the first year and also cashback. When you borrow and use your money for the business, you will be left with nothing if the business fails. This is why you need to make personal investment a part of your funding, and not all of it.

2. Getting help from your family and friends
There are successful startup founders who got funding from their friends.

You can raise funds from friends and family either directly or using crowdfunding sites like Kickstarter or Indiegogo. This worked for Scoot Cook, who is the co-founder of Intuit, a personal finance software. He borrowed from his parents to help his financial software company get started, and this was after 25 professional investors were no interested in investing. When you decide to use this option, then the money from your friends and family is at risk just like yours, making it important for them to have realistic expectations. Ensure you have properly explained your business and risk involved to your potential investors.

The good thing about this is the fact that your friends and family want you to succeed, and to some degree, they might be forgiving when you are going through the bumps that every entrepreneur has to go through. Once your business has plan has been finalized and about to get started with the process of seeking investors, have a digital means of family and friends supporting your venture, and offer them pers when the investments reach certain benchmarks. Always remember to send out a thank-you note for people who have invested.

3. Reaching out to entrepreneurial programs
There are programs such as incubators, accelerators, and venture studios offering funding alongside mentorship and networking. These types of programs will offer you some funding to get you started and also connect you with more funding opportunities that you might need down the line. Startups that took part in the GAN Accelerators were able to raise an average of $547,000 in the 12 months after graduating, and the top two sources over the period were angel investors at 47% and venture capital 32%, and this is according to the 2019 report from the organization.

On top of funding, the contacts and mentors you get through the incubator or accelerator program can help in determining the best mix for funding and also any other advice that might help you. If you are interested in an entrepreneurial program, then you need to choose one that has specialized in the industry because it will bring the most experience to your company. Have a look at the benefits the program has and see how alumni are doing after going through the program. If the businesses are still around years after graduating from the program, there is a good chance you will benefit from it.

Mark Adan
Has been working with writing challenged clients for over 5 year. He provides writing, publishing guest blog post services. His articles have appeared in a number of e-zine sites, including ArticleBase EzineArticle HubPages and TRCB.

Copyright 2020 © Mark Adan - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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