If you are planning to build your own startup, you are not alone. The Small Business Administration says that around 627,000 new businesses are established each year in the United States. This illustrates just how easy it is for just about anyone to build a business from scratch, but that’s not always the case.
Startup owners, a majority of whom comprise people under 40, still face the problem of raising enough capital for their businesses. Regardless of how good an idea you have, it’s impossible to accomplish anything if you don’t have the right number of resources in your pocket. One way you can get around the challenge of financing your startup is to consider the funding options that work best. Here’s a list of the top sources of startup capital you might want to check out:
These are people who are willing to set aside funds for small enterprises. Consisting mostly of veteran executives and industry leaders, angel investors aim to promote innovation and development across certain areas, whether it’s healthcare or information technology. The only catch is that angel investors are difficult to seek out. You may need tools like PitchBook or sites like Angels Corner for seeking out private equity investors who can help carve your dream. You only need to pitch your idea well enough so you can secure funding that starts from a minimum of $25,000.
If your idea for a startup has a potential to expand within a highly lucrative market, you might want to seek out funding from venture capitalists or VCs. These entities basically pool other people’s money together, invest it in small enterprises, and expect constant returns. Through VCs, you can access sizable investment funds which you won’t be able to repay in case the startup fails (just like angel investments). However, not all businesses can get funded this way, since most VC firms are more focused on technology. Unless you have a great idea for a mobile app or gadget that has a potential to catch on, VC financing might not be a good option for you
Despite being the “old school” way to finance a business, applying for a small business loan works well for startup founders who are looking to start out small. For that, the SBA has made microloans and other options available for you – that is if you are able to qualify under their strict eligibility criteria. Commercial bank loans are also a great option, but most banks require a solid credit score before they can approve your application. If you are a young entrepreneur who isn’t financially established, you might as well look towards alternative loans that are available in your area. If you’re in British Columbia, you might want to apply for payday loans or another alternative (and more importantly legitimate) lenders. You can learn more at iCASH about the different types of loans you can choose from.
If you can’t save enough cash for building your startup, you can look at these options for the resources you need. After all, you don’t want your ideas to remain in your head for too long.