Types of Investment for Startup Businesses
Whether you’ve just had a big idea or you’ve developed that idea into a workable product you will need funding at some point in the process to facilitate the early business model. Below you will find five ways you can access funding for your startup, choose the one you think suits you best and take your research to the next step.
crowdfunding is one of the best and most effective ways to fund your project. It involves setting up a page on Patreon or a similar website and advertising your business. If people like your idea of a project they will invest. When your startup is running, relieve their return.
Crowdfunding is different from conventional investment because it offers you the chance to obtain the money you need up front without any pressure. If your startup doesn’t succeed, the crowd funded simply get their money back. If you do, they get their product.
Angel investors are an excellent idea if you’re a startup business. Unfortunately, they can be tricky to track down. An angel investor is likely to offer you the bulk of the money you need for very little equity, if any at all. Angel investors are hard to convince because of the high risk stakes.
Regardless of the difficulties in finding and convincing Angel Investors, they do exist and can be a very effective source of funding. To find them, join your niche communities and flood leads. Remember to have an excellent pitch ready for when you encounter one.
One of the most frequent forms of funding for startups is from a venture capitalist. This can be in the form of an individual or a firm. A VC is usually part of a large pool of investors actively looking to put money into new projects. They are easy to find but drive a hard bargain.
Typically you can find a VC through your network channels. They will be ready to listen to your pitch and make you an offer if they are convinced. Usually a VC will ask for a high portion of equity and significant ROI. However, they might also give you some mentorship.
Is your startup business in its early stages, fragile and in need of protection. Some startups are like this, they need to build their reputation or develop their concrete planters product before bringing it to market. If that sounds like you then an Incubator investor could be the perfect match.
An incubator investor may not give you much in terms of upfront capital investment, but they will provide you with everything you need to protect your interest while you develop. They may give you an office with a good address, mentorship, and some financial support.
If on the other hand you have a product that’s on the brink of its big launch but you don’t feel aspects of the business are ready, an accelerator program could be the best thing for your startup. Like an incubator, an accelerator will protect your interests, but they will also provide the support you need to bring your product to market and make it successful.