Updated: Nov 19
Table of Contents
What are the stages of startup funding?
When one comes to realize that no less than 8 out of 10 startup projects fail to see the light of day, it leaves no room for doubt on the utmost importance of proper financing at all stages of the growth of a well-functioning startup. Furthermore, getting financing helps open up for the better recruiting of competent staff, more competitive product development, and overall brand reputation.
For that, there are several financing opportunities for startups to seek today. However, it is particularly crucial for startups - regardless of their size - to approach said options with enough understanding of the situation and greater circumspection to better avoid knocking at the wrong door, as risking losing precious time or being irretrievably indebted does not make for a positive outcome.
Startup funding: self-financing
A fresh startup concept may require out-of-pocket expenses, at first, particularly in the early stages of development, when ideas are bubbling. Given that time is of the essence to make a first impression, striking while the iron is hot is a great way to test the waters by assessing the commercial viability of the initial project and the response of the public.
Participative funding and love money
While every co-owner is to take part in the early stages of financing, the success and extent of this investment solution are in reality highly dependent upon each of the collaborator's initial capital contributions. That being said, and although detrimental, money is not the only valuable input into a startup: research projects or the development of web applications, for example, are worthy additions.
Whenever a first draft of the expected final product or service is sketched out, introducing it to your loved ones, friends, or acquaintances might prove helpful in getting some extra funding.
Salaries and shares
An ideal way to cut back on expenses from the start is to have employees on board that not only see the full potential of the endeavor but are consequently truly invested in it as well. When scaling their salary down, trading shares in the startup in return is not only motivating but moreover makes for a great return on investment for the day the company thrives.
Practically speaking, however, self-financing has its limits and may rapidly prove insufficient. While it is a non-negligible boost, the fact remains that the more it expands, the more a startup requires further funding.
Securing funding with a solid business plan
To better the startup odds at growing steadily and staying afloat, the more capital is injected into it, the merrier. To this end, the next logical move is to get investors' attention. Now comes the trickiest part of it all, as obtaining further funding is only proportional to the profit that they ultimately wish to make. In that regard, new small aspiring companies do not appear as contenders for the most promising success stories, complicating things even more. It does take a great deal of persuasion to win investors over. Understandably so, unrealistic or unfeasible projections do not make for convincing arguments nor are useful in helping your startup stand out. This is when your well-thought-out and detailed business plan comes into play.
Relevant arguments to consider
Surrounding yourself with a skilled team that is capable of matching the goals originally set for the startup and working on products that are likely to meet a specific demand are both decisive courses of action in getting encouraging results and further approval from potential investors.
Once your project is mapped out, business angles are one of the first of your many go-to sources of funding worth investigating. If they too see there is every prospect of success and are confident that they will reap benefits from your startup, then you can be sure to have secured enough for your project to come to fruition.
Investment banks are yet another source of eventual funding to turn to whenever your startup is up and running and has managed to draw enough attention. Once floated on the stock market, the shares of your company are made available for the public to buy and sell.
Doing extensive networking
Needless to say, networking is another essential part not to be overlooked, as it not only helps showcase your brand but maximizes your chances to broaden your business relationships. Partners that share a common affinity with your line of business are opportunities to seize when working on making a name for yourself. Strong mutual commercial bonds are as important in putting the word out as it is in consolidating your reputation and attracting investors.
Capital growth prospects
With your acquired networking skills and increasing numbers of contacts, your startup has gained popularity, secured a viable future, and can now very easily be the beneficiary of long-term funding and further private investments.
Financial support: business funding
As we have seen by now, seeking funding is far from being the easiest step, but it is key to propelling and later sustaining a young startup. Without it, chances are your project will show telltale signs of stagnating, from then on making it unlikely for you to be able to hire a better-suited workforce or expand at all.
In this article, we went over some of the many ways you could hope to rally investors in favor of your concept. Whatever your choice, our team of experienced specialists and financial analysts, here at Funding Routes, are all ears, ready to help you fulfill your project with the necessary business funding plan. We believe in new and original concepts, so do not hold back, and get funding today!