5 Ways to Fund Your Start-Up Business

5 WAYS TO FUND YOUR START-UP BUSINESS

5 Ways to Fund Your Start-Up Business

5 Ways to Fund Your Start-Up Business


Article By: Lynne Dominick and Heather Jadus

Incredible as it may seem, before 1972, a woman in the United States looking to purchase a home needed a cosigner to take out a mortgage, even if she met all of the financial qualifications on her own. 

In 2016, women will not only continue to wield significant individual purchasing power, they will be responsible for 43% of all small business start-ups, rising to an estimated 50% by the year 2020.  

Adequate capital behind any new business is absolutely essential for its success.  Here are some of the most commonly used methods of securing revenue.

Bootstrapping

One of the motivating factors in having your own business is the independence that comes with it.  As a result, your goal should be to retain as much of the controlling interest in your business as possible.

Lines of credit along with business credit cards can provide great leverage and help you to get things off the ground.  American Express, Chase, Citi and Capital One offer bankcards that have no annual fees and low interest rate options specifically for new businesses owners.

Friends & Family

Asking friends and family to help get you through the initial launch stages is also a widely accepted way of funding your start-up while maintaining complete ownership. 

Angel Investors

An angel investor is someone who provides capital for a business start-up.  Most of the time, an angel investor will provide a loan or ask for shares in the company depending on both the financial and time obligations required.  

If you end up seeking revenue by this method you will need to have a business plan that lays out a vision for your business that includes specific costs and anticipated revenue for at least 18-36 months.

Recently, we have seen the growth of angel investor groups such as 37 Angels, http://www.37angels.com/#focus, a network of investors that has been created to specifically fund start-ups by women.  These networks are a great source of potential revenue, but will most likely require you to give up a sizable percentage of the company.

Crowdfunding

Crowdfunding is one of the fastest growing segments of revenue sourcing for new businesses throughout the world, allowing businesses to obtain small amounts of revenue from a huge network of people.  It is estimated that Crowdfunding will skyrocket to a trillion dollar industry by 2020.

Participants can chose from equity as well as non-equity based crowdfunding platforms depending on what product or service they are looking to fund.

Product based crowdfunding allows visitors to purchase a product at a special rate in return for their monetary support.  Kickstarter, Indiegogo
and GoFundMe are among the most popular crowdfunding sites.
https://www.kickstarter.com/, https://www.indiegogo.com/#/picks_for_you
https://www.gofundme.com/

Equity based platforms work similarly to that Angel Investing, requiring that an owner turn over a percentage of the company in return for monetary investment.

Crowdfunding 2.0

There is an exciting brand new crowdfunding platform called Smash Fund that is rewriting the rules by using a Share Economy business model similar to the one used by Uber.  

By marrying a premium social network with a crowdfunding platform, Smash Fund is able to provide network partners with 80% of the collected membership revenues in addition to any revenues collected through direct crowdfunding.

Smash Fund is also eliminating the conditions and fees associated with traditional crowdfunding platforms as further incentive.  To learn more: http://smashfundgal.smashfunder90.com/
http://smashfundguru.smashfunder90.com/

No matter how you elect to raise money for your business, you need to investigate all of the options open to you and select the one that best matches the needs of your start-up.

Preparedness is fundamental to success.

 

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