When you came up with your brilliant business idea, did you have a vision of a shimmering fairy descending upon you moments later, tapping you gently with a wand, and giving you the amount you needed in startup capital?
Never say never, but that particular scenario probably didn’t play out for all the entrepreneurs out there. Instead, you most likely had your lightbulb moment, drafted a business outline, and told some trusted friends. Then you realized that running a business takes a lot more money than it seemed it would, even if you don’t yet have a storefront, a large team of employees, or an office space.
Fortunately, there are more ways to fund a small business than you might realize. If you don’t happen to qualify for traditional small business loans or your credit is shot, there may be another option. Check out some suggestions for valid routes to funding your startup dreams.
Who knows? The shimmering fairy might exist after all.
Angel investors can be heaven-sent
They might not have wings, but they are called angels for a reason. These investors have a high personal net worth and are often willing to take a chance on a new business. Most people don’t have immediate access to their region’s most prosperous individuals, so try poking around some websites like Angel List, Golden Seeds (which focuses on women entrepreneurs), and Angel Investment Network (which is active in more than 80 countries).
Employ the millennials-old strategy of bartering
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It might be the 21st century, but bartering your services in exchange for some help can still be a reliable way to get some assistance. Take stock of what you have to offer and see if there’s anything you can do to offset some of the overhead costs of your business. You can’t trade magic beans for a cow, but can you retain a lawyer by exchanging equity for legal services? Can you trade some product for a few months’ worth of office rent? Don’t be afraid to get creative, and if you’re not sure where to start, take a look at some online barter exchanges.
Go from rags to riches with an incubator (or accelerator)
If you need a bit of help refining your business idea and starting your company from scratch, you might want to consider a startup incubator. If you’re already working with an MVP (minimum viable product), you could look at an accelerator, which can help your business race through its awkward teen years and come out polished and professional in no time. Both of these options often provide startups with capital, mentorship, and networking opportunities with investors. Not a bad deal in exchange for a little equity!
Put your best foot forward with a venture capital firm
Venture capital firms (VCs) want to know you’re worth the risk, so you need to be able to prove that you’ve got what it takes to make it big. Unlike individual angel investors, VCs are groups, and they typically expect a higher percentage of the profits or rate of return. They also might want a seat on the board of directors and an ownership stake in your business. The best part of working with a VC is the stability, exposure, and access to resources that it can provide. Here are some of the top venture capital firms for startups.
Ask the kingdom
Raising money through crowdfunding or from your friends and family are popular methods, especially in the nascent stages of a startup. Future investors will want to see that there is already a large contingent of people who think your idea is as marvelous as you do. It can sometimes feel uncomfortable at the outset to ask people to believe in you, but chances are they already do and might be more willing to prove it than you know. So, take advantage of your social media accounts, don’t hesitate to ask for likes and shares, and check out some of the best and most popular crowdfunding websites for startups.
Of course, you can always use your own money (a practice commonly known as bootstrapping), but that can take some extra time and cause frustration. If you really want to make your startup the stuff of legend, it’s time to stop wishing upon a star and begin exploring one of the funding methods above. It might be just the magic you need.