6 Ways to Raise Capital for Your Startup

Money is the bloodline of any business. Acquisition of funds that can help you to build your startup is an immense challenge, especially if you do not know where to start.

There are various options for securing capital for your startup. Here are 6 ways through which you can raise capital for your startup:

1. BOOTSTRAPPING YOUR STARTUP

The process of utilizing personal saved up funds or funding from friends and family is known as bootstrapping or self -funding. This way of raising capital is the most common among startups’ early stages. Founders or team members put their money together for their startup.

Funding your own startup is one way of telling your potential investors, how serious you are about this venture. Putting your money in the project shows that you are willingly taking the risk of putting the money that you have worked hard for at stake, supporting your idea with the faith you have in your company.

READ: Pros and Cons of Bootstrapping Your Startup

2. CROWDFUNDING

When an entrepreneur is involved in crowdfunding, the person generally utilizes the Internet to solicit funding for a specific business idea. Crowdfunding platforms are basically set up for individuals to pitch their business ideas to a community of investors or people willing to support their ideas.

How it basically works is that an individual makes a business pitch on the crowdfunding platform, he shares his business model and its potential for growth. If his idea is bought by the crowdfunders on the platform, they’ll make a pledge to support his business model publicly and donate funds respectively.

READ: 5 Best Crowdfunding Sites to Fund Your Business Ideas in Nigeria

3. ANGEL INVESTMENT

Angel investors are individuals with surplus cash and a keen interest to invest in upcoming startups. They also work in groups of networks to collectively screen the proposals before investing. They can also offer mentoring or advice alongside capital.

Knowing this, angel investors can be a good source of capital for your startup. First, you must have a solid business plan put together and a great pitch ready. You have to capture their attention with enthusiasm and promising data points about your startup’s current situation and future potential.

4. APPLYING FOR LOAN

Another way to get your startup financed is a business loan from the bank. It is one way of keeping the initial control of the startup in your own hand. Taking a loan for startups might be healthy but only to those who have full confidence that the business will prosper in the first run without difficulties.

But while considering a loan, check the interest rates and also if you have collateral to give. Crosscheck with all the facts, whether you are able to comply with all the terms of the loan.

5. CHECK INTO GOVERNMENT FUNDING/GRANTS

The government can offer a reasonable amount of funding opportunities for newly-established businesses. As you’d expect, the government generally funds viable business plans with good future projections. As such, grant applications have to be persuasive enough to acquire this funding.

6. SOURCE CAPITAL BY WINNING CONTESTS

Another amazing way to source for capital is through engaging in competitions or contests that require entrepreneurs to showcase or pitch their business plan against other competitors vying for the same funding for their businesses.

As a contestant, you are required to present a comprehensive and detailed business plan if you are looking to win over investor confidence.

CONCLUSION

There are several ways of raising capital for your new startup. All you need to do is choose one that is best for you and your type of business. Begin with going through all the options that are beneficial to you and your startup, then slowly cut down to the best options that will reach your goals.

About the author

Damy

Growth Hacker and Tech Enthusiast.
There is no discovery without risk.

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