How to Raise Funds for Your Startup

startup business ideas

Startup

It is estimated that 90% of the companies funded each year, will not make it to initial public offering (IPO). Offering distinct opportunities and risk to investors.

The best startup businesses can sometimes not be identified until the point of market research and customer demand. This is where the big impact or the product or the service of the startup is determined.

Startup Business

A startup, is a company that is at the beginning stages of operation. Startups are developed by one or more entrepreneurs who want to develop a product or a service. Most of these companies, always start with a limited revenue and high costs for entrepreneurs, hence leading them to look for capital somewhere else to fund their business.

This capital can be raised from friends and family, can be loaned capital from the bank, can be raised from venture capitals, funds can be crowd funded and more, and selling share stock percentage.

To get a business off the ground, you will first have to look for a business name, draw out a business plan, estimate the costs, and understand how you are going to fund the whole entire business.

Whether you are raising capital or putting your own money into your business, you need to know where the investment is need the most, where the investment makes sense and a difference, and also watch if the investment is helping or hurting your plans, and if you need to raise more capital or not.

Attracting many outside investors might not be crucial, but this depends on what kind of business you are starting and the large landscape you have drawn out for the business. Keeping in mind the legal infrastructure of where you will conduct your business, How you will manage to produce your product and services must come to play, (example; A factory, a physical office, head Quarters)

How startup gets funding

Focused around a single product or service founders want to bring to the market. A comprehensive business plan outlining the company’s mission statement, visions and goals, will also withhold the management of the company and marketing strategies.

How startups get funding is by asking friends and family to fund their business, selling shares of their business to investors so they can fund business expenses, asking for a loan from a bank or creditors and looking for private instead of public investors.

How startup raise money

Capital can be used to invest in research and develop business plans. Know how to raise funds, how much you need for funds, and where you are going to invest those funds.

Location

Locations, depend on what products you are producing or service that you are giving. There are other ventures that will need more space that others, and others that will not need space at all, because of how complex or how simple the venture will play out.

You need to decide if your business is online based, if you are going to have an office building rented out, or if you are capable of using your own home office .

Example 1, someone that want to start an apparel business, if they cannot afford to store merchandise, they can find a manufacturer and white label everything and just ship only when a customer buys something using the manufacturer, without having to store the physical goods themselves. This entrepreneur might not need a big physical space to work with, conducting the business at home might be simple and cheaper.

Example 2, A technology startup selling virtual reality hardware may need a physical storefront to give customers a face to face demonstration of the product’s features, This location can be a popshop or a physical address store for this entrepreneur. Making this a must have physical location startup, and the consideration or renting out space or buying a building has to be planned out.

NOTE: With complex products, there are goods that can only be produced in a certain environment, accommodating the legal structure to withstand the production requirements can be another entity you need to take care of. There are products that need to be produced at a certain temperatures, leading to production rooms, to be built in temperatures that accommodate the making of the product (this leads to some production rooms to sometimes be too cold or warmer than the normal).

Legal Structure

Business comes with risk and liability, You have to have a legal structure that is accommodating to your business. You need to know if you want to do sole proprietorship or a partnership to manage or reduce the level of risks of the whole entire business.

For Sole proprietorship Personal liability can be reduced by registering the startups as an LLC (a limited liability Company)

Startup loans for business

Turning to family or friends or by using venture capitalists. Example: Silicon Valley (known for its strong venture capital community and is a popular destination for startups) a group of investors that specialize in funding startups can help you raise funds for your business.

Another way of raising funds of capital of your business is by doing Crowdfunding (Making a page online and that allows people who believe in the startup to donate money to the startup)

Also credit can be used to commence startup operations, by having a perfect credit history, creditors, may allow the startup to use a line of credit as funding. If the startup is unsuccessful, this carries a lot of risk, especially because of high rates that might come with the credit line.

Small business loans is another option for funding. Banks usually have options specialized for small business, a business plan is often required to qualify.

Other resources of Startup Knowledge

Startup Podcasts

Startup podcasts hosted by entrepreneurs that have had startups and are skilled with giving advice to new startups. is tremendous helpful when it comes to applying other’s skills into your own path of being a successful entrepreneur.

There are people who have already done it, so you don’t have to re-invent the wheel. being able to read the books that they read, apply the things that they applied in a certain areas of their business, can help you avoid making costly mistakes.

There are so many podcasts, Resources you can use to find podcasts that will relate to your industry is search the keyword industry you are in and search for podcasts in your area of expertise to trigger interest results. Good places to look are Spotify, Apple podcasts, Youtube and Google search “keyword podcasts”

The best business podcasts
1) Shopify Masters
2) Oberlo’s Start Yours
3) Duct Tape marketing
4) The $100 MBA Show
5) The copywriter club

Best Startup Businesses

Cons of a Startup business

  • Not having a customer base from the jump
  • Lacking a path to sustainable revenue
  • Market research gets expensive and demanding (market research helps determine the demand for a product or service).
  • The risk of losing investment is a real possibility
  • The ideas can sometimes be too risky
  • Legal, Regulatory and compliance issues to get permits
  • The competition to similar products can be too high

Pros of Startup business ideas

  • High returns of investment
  • Low risk if you have a partnership or an LLC
  • Indirect investments in startups using private equity
  • Angel investors: private individuals with some accumulated wealth that specialize in early-stage investing of companies, might be able to provide you with capital.
  • A successful company can birth sister companies (an extension of the main company)
  • You can be a problem solver for millions of people and become an expert, a trusted source of information.

People also ask

How startup gets funding

Startups get funded by family and friends, bank loans, selling of company shares to investors, and looking for private or public investors that invest in startup companies.

How startup raise money

By opening an account online and asking for people who believe in your startup to donate is one way to raise money.

Startup business ideas conclusion

Many startups fail within the first year, that is why it is crucial to make this an important timeline for your business plan. You need to find capital, create a business model that will model after your business plans, hire the right people, work out equity stakes if you have investors, and plan for the long run (an amount of 5 years ahead is enough to plan for)

Deals normally structures over 10 years until exit, by going public (via an initial public offering “IPO”) or being acquired by another company or remaining as a profitable private venture, can also be the life of the company after a certain period of venture and operation.

Evaluating the business plan and model from generating growth and profits in the future, is a due diligence for the company that must be established by the owners. A translation for returns must be calculated to fully performance expectations in the coming near future and how to deal with “situations” in the real world, incase the forecasted events play out.

The personality and drive of the company’s founder is important as the idea itself, Founders must possess skills, knowledge, and passion to hold them up through growing pain periods and discouragement periods. Staying focused and being open to ideas will make constructive feedback for the task that is at hand.

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