Skip to content
What Are The Best Funding Options For Startups? (Collaborative post)
Photo credit

Starting a business isn’t cheap, as everyone knows, you have to spend money to make money, or at least invest your time, which is more valuable than any money could be. Even the most low-cost, bootstrapped startup is going to need some financial backing at some point, even if they grow in success and stay private for the rest of their commercial life.

It’s fair to say that startups operate on small scale budgets, but even they need money to keep balancing the budget. For some people, funding comes from savings and other efforts in the industry. But not everyone has that kind of wealth to assist them.

In this post, we hope you can understand the best funding options for startups:

Personal Savings & Bootstrapping

Now, the simplest (and lowest-risk) option is of course using your own money. If you can fund your business yourself, you don’t have to worry about loans, interest, or giving up a percentage of the firm that has only just gotten started. But, of course, this depends on actually having the money. It’s also risky since you’re putting your personal finances on the line which could be lost entirely, and even setting up limited liabilities to write off costs doesn’t really help, because you are both your creditor and debtor at the same time.

Business Loans

The most common option is to borrow money, and pay it back over time. Business loans can come from banks, credit unions, or a finance company that ims to point you to the right resources, and they’re often a good choice for businesses with a solid plan and clear financial projections.

Of course, loans mean debt, and if your business doesn’t work out, you’re still on the hook for repayment. Depending on your credit and business history, securing a loan can be tough too, so it’s worth making yourself into the most appealing financial prospect you can.

Angel Investors & Venture Capital

If you need a lot of funding and don’t want to take on debt, investors could be the best approach for you, but of course this isn’t quite like clicking your fingers and getting a source of funds. Angel investors, should they like your idea, setup and prospects, will provide capital in exchange for equity in the business to some degree, as you often see on shows like Dragon’s Den or Shark Tank. Moreover, venture capital (VC) firms invest larger amounts in high-growth startups, as we’ve seen in the tech space for quite some time now. However, you’re giving up a share of your business for this, or at least offering guaranteed returns. If you’re happy to cede control or even make use of that advice, it’s not a bad option.

With this advice, we hope you can more easily find the best funding option for your needs.