6 Ways to Raise Funding for Your Startup

By being creative and learning from the methods used by entrepreneurs who have already succeeded, you can usually succeed at acquiring the capital necessary to get your business started.

1. Give Equity to Friends and Family

You should always start by reaching out to your family members and friends to raise funding. Friends and family rounds work because they rely on preexisting trust that you have established with the people who are closest to you. Furthermore, if you are truly passionate about your business concept, your friends and family have probably already seen your drive to succeed. Therefore, they will want to share in your success, and they can do so by investing in your business.

2. Use Crowdfunding

Crowdfunding is becoming an increasingly viable way of raising funding for a new startup. This funding channel can be especially powerful when your business concept is substantially disruptive or has a strong social purpose. Crowdfunding works best when you have an exceptional social media presence that can be used to get the word out about your crowdfunding initiative. You can also leverage the influencers in your network to get similar reach.

3. Get Funding From Key Stakeholders

If your offerings will have a substantial impact on any individual or business, that party will often be willing to help make your business a viable reality. By investing in your business, the affected stakeholder will be able to get early access to the benefits that your offerings would provide. These stakeholders also tend to be very informed about the value and viability of the concept that you are trying to bring to market, so they will usually have the confidence to pay a premium for shares in a viable startup. Key stakeholders who could be interested in funding your business include suppliers, large buyers, governments, and even commercial landlords.

4. Use Your Home Equity

When looking to fund a new business, many entrepreneurs forget about the value that they have accumulated in their homes. Tapping your home equity does not usually necessitate moving. You can refinance your mortgage or get a home equity line of credit from your bank. Refinancing and HELOCs are the cheapest funding sources available because these loans are guaranteed by the asset value of your home. However, even if you have less equity built in your home, selling your home is still one of the best funding options available. If you truly believe in your business concept, home equity should almost always be tapped first before seeking ordinary outside funding.

5. Work Out of a Business Incubator

Another great strategy for raising funding for a startup is to have your founding team work out of a business incubator. These facilities are designed to facilitate interaction between other members. You will be able to meet other entrepreneurs in your same industry who are at various stages in the growth process. Therefore, you can pool and combine resources from other businesses to achieve your objectives. Most importantly, you will get to interact with a wide range of investors. Nurturing relationships with talented individuals who are working out of incubators is usually a priority for investors because these facilities provide a rich talent pool of entrepreneurs who are serious about launching disruptive startups.

6. Get an Advance From a Major Customer

Startups that sell substantial products and services to large buyers can often negotiate advances from a major customer that can be used to fund initial startup costs. In some cases, you may be able to simply insist on an initial retainer fee to obtain this funding. Although it may take longer to close a sale when you request a substantial amount of money upfront, doing so can enable you to get the first big check that can be used to purchase the assets you need to get started.

Getting the Funding Your Startup Needs

The the level of difficulty associated with raising funding for a new business depends on the value proposition of your new venture and the quality of the existing network that you have. However, by dedicating yourself wholeheartedly toward making your business a reality, you can usually get an investor to believe in your vision enough to provide you with the funding that you need.