Getting the Ball Rolling: 5 Fundraising Options for Startups

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Businesses that lack access to capital are always more vulnerable than others. This is particularly true of startup-stage companies that need time to develop healthy cash flows and build up reserves.

Fortunately, there are plenty of effective ways for entrepreneurs to raise money for their latest creations. The following five fundraising options have proven to be among the best for many startups in recent times.

1. Crowdfunding

Many startups come into being because of a truly new, interesting idea. There are millions of people who are open to hearing about fresh concepts and even backing them financially if given the opportunity.

Crowdfunding has become an especially popular and accessible way to make sure that startups have the capital they need. Services like Kickstarter and GoFundMe have allowed many entrepreneurs to raise millions of dollars for their companies.

This style of fundraising tends to be most effective when donors receive something tangible in return. Whether that means laying down a personalized Fundraising Brick for every supporter or providing free products, there are plenty of appropriate options.

2. Startup Accelerators

Startup incubators like Y Combinator have helped hundreds of companies become established and even dominant. Joining an incubator or accelerator should always mean receiving a wealth of informed advice and access to networking opportunities.

The leading startup accelerators today also put plenty of capital at the disposal of their most promising members. While signing up for financial support will normally mean handing over some equity, that can easily be a sacrifice worth making.

Naturally enough, top startup incubators tend to be selective, so it will always pay to put plenty of effort into assembling an outstanding application. Funding tends to be doled out only to those participants that impress partners the most after joining, as well.

3. Angel Investors

Some people of means enjoy nothing more than helping new businesses succeed. Oftentimes entrepreneurs themselves, these angel investors are ready to fund and support companies that have a lot of promise.

Just about every metropolitan area today includes both angel investors and groups devoted to connecting them to those in need of help. While an angel investor will almost always ask for a stake in a company, many are willing to accept relatively little in exchange for the capital they contribute.

4. Government Grants

Although the free market ultimately decides whether most startups succeed or fail, the government has some say in such matters. There are countless government programs designed to encourage entrepreneurs to start certain types of businesses.

Because of this, government grants will not always be available even to startups that need the support the most. For entrepreneurs who have chosen to focus on types of business that legislators have deemed worthy, though, government grants can provide welcome support with no strings attached.

5. Family Members, Friends, and Professional Acquaintances

Although there are plenty of other options, the most time-honored way to fund a startup is to ask for help from those you already know. That can certainly create some tension, as when family members feel compelled to support a business idea they would actually rather not encourage.

Many entrepreneurs have found that being transparent with existing acquaintances can enable mutually rewarding fundraising, however. It is always important to be upfront with investors, not least those with whom you already have relationships.

At least one of these five fundraising options should suit any startup well. Making sure that a newly formed company has the capital it needs to become established will always be one of the most important steps an entrepreneur can take.

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