What are 5 Different Ways Startup Businesses Get Funding?

According to a recent study, most startups fail within the first year of operation due to lack of funds. Every business survives by money. They need capital- the funds that drive the business’ growth. That’s why entrepreneurs continue to figure at every stage of their business how they can generate more finance.
Now, the point where the fund is needed in a business depends on what type of business you run and the nature of the business. But once you realize why you need the fund-raising, the following ways will teach you how you can access that fund.

1) Bootstrapping your startup business:

Bootstrapping is called self-funding, an effective way for startups to obtain financing. First-time entrepreneurs often find it difficult to obtain funding without first showing the business plan for success. You can invest your savings or start a contribution for family and friends. Sometimes, family and friends can offer loans at flexible interest rates.
Bootstrapping offers many advantages. You are tied to your business when you have your own money, Most investors consider this a good point initially, but this is only suitable with small requirements. However, bootstrapping is not a great option for businesses that need money from the first day. Bootstrapping stretches resources- financial or otherwise. 

2) Crowdfunding As A Funding Option:

Crowdfunding was not quite known many years ago but now it has gained popularity because of the benefits it offers. Crowdfunding works by an entrepreneur putting up a detailed description of his business on a crowdfunding platform and getting contributions from consumers that read about his business and like the idea. Those giving money will make online pledges with the promise of pre-buying the product or giving a donation. Crowdfunding your business can help you determine the interest people will have for your service or product. This also cuts out the need for professional investors and brokers and might attract capital investment down the line if your company has a successful campaign. However, crowdfunding is a competitive place to earn funding, so be sure that you have a rock-solid business that can gain the attention of the average consumer.

3) Get Angel Investment In Your Startup:

Angel investors are people with surplus cash looking to invest in a business. They work in networks to screen proposals before investing. Many prominent companies like Google, Yahoo, Alibaba have benefited from angel investors. This form of investment occurs usually in the early stages of a company’s growth, with investors investing up to 30% of equity.

4) Get Venture Capital For Your Business:

If you believe your business is the next big thing, getting venture capitals can be the way to go. Venture capitals professionally manage funds invested in companies with huge potential. They usually invest in business against equity and exit when there is an IPO or an acquisition. VC’s are the litmus test for a company’s future evaluating sustainability and scalability.
A venture capital investment may be appropriate for small business that has passed the startup phase and generating good revenues already. However, the downsides to venture capitalists is that they have a short leash in company loyalty and often look to recover their investment in a few years. They are usually after companies with larger opportunities and a strong team and good traction.

5) Get Funding From Business Incubators & Accelerators:

Startup Businesses can consider incubator and accelerator programs as funding options. They are found in every city and these programs assist hundreds of startup businesses yearly. Incubators nurture businesses while accelerators help them take the giant leap as they mature. These programs run normally for 4-8 months and require a time commitment from the business owners. Also, the owner will also develop good connections with mentors, investors and fellow start-ups through the platform.