By Damilola Faustino
Even if you have somehow managed to get the initial money to start your business, finding funds for running your startup requires a substantial amount of work and research. Here are sources you must explore to give your startup the financial injection it needs.
Whether you are looking for short, mid or long-term financing for your new startup, banks are the best place to get it. Make sure you generate enough revenue to repay the bank loan and its interest. Banks offer you flexible loan payment options, which makes the loan repayment journey easier for young entrepreneurs.
Venture capitalists invest institutional money into startups, which has a very strong growth-oriented business model. A venture capitalist will only invest in your startup if he or she sees huge growth potential. Therefore, never hesitate to apply to venture capitalists for these funds.
Crowdfunding has emerged as a new growth-oriented for businesses to raise funds. The growing popularity of crowd-funding sites such as Kickstarter has made it a viable option to get you startup off the ground. If you are young, passionate and energetic, you have a much better chance to secure funds for your business through crowd-funding campaigns.
Friends and family
You should consider pitching your business model to your friends and family. If you are yet to do this, it is advisable to do so now. The best thing about getting friends and family members to fund your business is that they are less demanding. They will ask you for a small compensation in return for their investment. You can also consider making your friend or family member your business partner.
Another trend that has gained momentum in recent years is of startup incubators and accelerators. Companies such as Y Combinator have worked with big companies, top universities and community development organizations to help startups hit the ground running. These startup incubators provide you with the infrastructure to run your business at an affordable price.
The biggest downside of external funding is that the investors play a major role in decision-making and you have to share a big chunk of what you earn with them, which kills the main purpose of you starting your own business. If you keep your finances in order from day one, you can easily fund your own startup and will not have to depend on external sources for help.
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