A business idea can be brilliant, but it can only establish an enterprise when entrepreneurs determine where to find funding for a start-up uses the funds to develop a company. Below are funding options for a start-up.
Crowdfunding is to raise funds through multiple funders, usually through a popular website. Start-up entrepreneurs set up a profile on a crowdfunding site with a description of their company, its business, and target raise. People who develop an interest can donate to the campaign in exchange for rewards like a product, service, discount, profit share, or equity in the business. Each site charges a fee to list a campaign.
This type of financing comes from angel investors. These persons invest in early-stage or start-up companies to receive an equity ownership interest for their funding. Angel investing in start-ups increases due to high-profile success stories like Facebook, WhatsApp, and Uber. Angel investors are making multiple bets hoping to get outsized returns. Typical angel investment is $25,000-100,000 per company, but it can go higher. A captivating introduction from a friend or colleague of an angel helps to get angel investors.
Small Business Loans
Many traditional and alternative lenders offer small business loans. The loans are available in different types, with options varying according to business needs, loan-specific terms, and length. Entrepreneurs can get one of these small business loans.
- Small business line of credit
- Accounts receivable financing
- Working capital loans
- Small business term loans
- SBA small business loans
- Equipment loans
More lenders are lending to small businesses, with some providing the service online.
Small Business Credit Cards
Several credit card issuers fund small business markets, with many having unique benefits like cashback rewards. Some issuers tie a card down to personal credit score and history. However, a new wave of card issuers does not ask for a personal guarantee, meaning using a card will not impact the personal credit score. Entrepreneurs can apply for a small business credit card online through their banks.
Venture capital (VC) firms provide capital and much more, including introducing potential partners and customers. Venture capitalists like investing in start-ups pursuing significant opportunities with growth potential, so their financings are easy to obtain. The best way to get the attention of VCs is to get a warm introduction through a trusted colleague or professional acquaintance venture capitalist like a fellow entrepreneur or a lawyer.
The information above gives an idea of where to find funding for start-ups. Entrepreneurs should contact different fund providers to establish those with favorable terms.