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Funding can be a great help to get your startup up and running. However, it’s important to know that some types of funding are more beneficial than others, or simply more appropriate for your startup’s unique needs at its current stage. Here, we’ll show you some of the top funding methods you can take advantage of to help get your business off the ground.
Crowdfunding
Crowdfunding is a newer kind of small business funding. It can be beneficial for a startup if they’re, for example, wanting to raise funds for a new product that they’re bringing to market. You should note though that limits are placed on the amount of funding you can receive through this method. Crowdfunding is generally advantageous for business ideas that are specialized or those that target the younger generation. A benefit of crowdfunding is that you can still keep your equity and intellectual property. Some do, however, decide to use a type of equity crowdfunding to fund their business.
Government Funding
Funding through government grants can be useful for a startup. Grants from the government tend to be a good option when business ideas coincide with governmental policies that their business is involved with such as non-profit organizations, eco incentives, and certain types of projects. When your startup is hoping to work in such areas, government grants can be one type of funding that will be of huge help. It’s imperative to note though that the guidelines are strict for giving these kinds of grants and they can only help fund a small number of startups. Therefore, you should seek out incubators and business accelerators within your business’s area of reach that will help fund and provide support when you begin your business operations.
Venture Capital
While venture capital funding is typically useful for businesses that are already up and running to take their success up a notch, startups can benefit too. However, this generally is an option when the business has more than a billion-dollar valuation.
Venture capitalists will figure out the valuation for your business, the likeliness of growth and development, and your business model before investing. Sometimes, they’ll even work to propel your business into becoming an Initial Public Offering (IPO). This means that your business will sell stocks and shares on the stock exchange, changing ownership from a private to a public business. When it comes to investing, venture capitalists generally give a generous level of funding.
Angel Investors
Often, startups seek investment from angel investors who can help fund their capital. Angel investors act as silent partners who wish to see what cash the business can make. Startups require an effective business plan when partnering with angel investors while angel investors make calculated risks, offer more flexibility than other types of providers, and can give funding in various amounts.
Some advantages of gaining investment from angel investors is that they can not only invest in startups but also offer mentorship and provide seed funding.
Conclusion
Funding can help your startup get off the blocks and start operating in the business world. You’ve now learned some of the main types of funding that your startup can benefit from. These include funding coming from the government, venture capitalists, and angel investors.
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