If a recent study is to be believed, more than 94% of new businesses fail during the first year of operation. Why is that so? This is primarily because they lack the required funds. It is, perhaps, one of the major roadblocks in an entrepreneur’s journey.
So how and when to acquire funds? The ideal time to obtain funding could vary depending on a range of factors – the nature and the type of business and so on. Once you have identified the need for fundraising, here are a few ways to move forward:
Crowdfunding
One of the advanced ways to fund your startup is through crowdfunding. The whole process involves taking a loan, pre-ordering, and getting investments from more than one person at the same time.
All you need to do is enlist the goals of your business on a crowdfunding platform, propose ways through which you aim to make a profit and mention how much funding you need.
One of the reasons that crowdfunding is becoming popular is that in addition to helping you finance your startup, it also helps with marketing. This process also cuts out professional investors and brokers and helps you acquire funds from everyday people.
Angel Investment
Angel investment is a kind of investment offered by angel investors who have surplus cash with them and are interested in investing in amazing startups. They typically have a team of people who screen the proposals for them.
Angel investors, in addition to offering you the investment, also provide you with mentoring and advice on how to run your businesses. Angel investors have helped a number of companies become what they are today, like Alibaba, Yahoo, and Google.
Venture Capital
Venture capital is a collection of funds managed by professionals who have a knack for investing in companies with huge potential. These investors generally invest in businesses against equity and tend to exit whenever the business is acquired or an IPO is released.
Although a venture capital investment can be great, it is inappropriate for businesses whose product will take longer to get to market. They are more appropriate for small businesses that are already generating revenue and have moved past the startup phase.
It is important to mention here that venture capitalists often look for larger opportunities with better chances of success. They prefer stable companies with an exciting team of people. Further, they like to exercise a bit of control over your company. If you are not okay with that, they might not be the best option.
Conclusion
Undoubtedly, all of these methods are great, but they have their own downsides – and moreover, it is tough to acquire funding through them. If you wish to make things easy, Seedology is an ideal option for you. Seedology is a software development company and venture capital firm rolled into one. It helps you turn your ideas into a profitable business by empowering you with the right knowledge, experience, technology, expertise, and support to help you excel.
It is designed to help early-stage technology startups launch their initial product with the goal of taking it to market or acquiring additional funding after the concept has been proven.
Always keep in mind that if your business idea is appealing and engaging, you will find many investors running up to you.
