Three Popular Ways To Fund a Startup

Editor’s Note: Here at Dispatches, we are always looking for ways to help our readers do things. For some of our readers, that means helping navigate the working world, for others, it means assisting in the ever challenging question, “what’s for dinner?” For still others, it means figuring out how to balance family life with everything else. In an effort to aid in all of these endeavors, we have collaborated on this article written specifically for our readers.

If you’ve got a business idea, it can be hard having to wait for the right moment to launch. After all, you’ll be passionate about what you are sharing and want to get going. But in a lot of cases, you can only really get started when you have baseline funding.

One of the best things to do to start is to analyze your business goals and where you want your business to go long term. This can give you an idea of the kind of funding that may work for you and what funding will help you start your business the right way.

As it isn’t a decision to be taken lightly, you need to have an understanding of all of the options available to you. Do your research and your calculations, you may also want to get an advisor to help you assess the various implications of each type of capital. Don’t get sucked into doing something just because someone is offering you money if it isn’t going to be right for your business.

  1. Crowdfunding: With the wonders of modern technology, we now have a modern way of crowd funding online to start a business. Using an online platform, anyone can donate money to help your business get started if it is something that they can see working or are passionate about it themselves. Generally, the donation comes with a pledge that they’ll buy your product when it comes out, for example. Sometimes shares in the business are offered for donors, depending on what they give. So if you have a business that is something that will appeal to a wide range of like-minded people, then it is something that you might want to consider. Though this can sound like a fun and modern way to do things, you do need to bear in mind that there are many of these that go unfunded each year. So it can be worth a try, but it does need a big push and a well thought out and executed plan.
  2. Small Business Loan: One of the more obvious ways to get funding is going down the small business loan route. Going to a bank and presenting them with your business plan can be a good way to get a loan. Your idea and business plan need to be viable, though, as the bank wants to make sure that they are going to be able to get their money back. You should be wary of interest rates, though, and work out how much you will actually be paying back in the end. Then consider if it is a good option for you and something you will be able to pay back, You may also want to consider a traditional bank loan if the interest rates are better. Be wary of payday loan centers. While there is more and more checking and regulating the use of paycheck loans, these should be a last resort and only under the advice of a trusted advisor. 
  3. Angel Investor: Unlike a bank, where there is a lot more ‘red tape’ and regulation, you could approach a single person to be your angel investor. Often, it will just be a private, wealthy individual who will want a stake in your business. It is likely that they will want a large stake in your business, though, so you’ll want to think carefully once they have given you an offer. But it does mean you can get your business up and running and starting to make money. Over time, you could buy them out, but to start with, this can be a good starting option. 

So there you have it, three ways to fund a startup. There are more options, such as self-funding, or going through a venture capitalist. You ultimately must choose the right option for you and your business. 

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