Embarking on the journey of having a start-up of your own can be a long and usually very daunting process — especially if it is your first time in the market. So many things have to be looked after — a suitable niche, a proper, scalable business model, long and short-term plans, sustainable growth factors, etc. But, of all the things that need to be taken care of, the most important is definitely the seed capital that is an essential foundation throughout.
If you have been doing your research properly and hustling to set up your own business, then you probably know how hard it is to get help with fundraising or finding potential investors willing to hedge their bets for you. Even though a majority of entrepreneurs choose bootstrapping, i.e. building their businesses from the ground up with their own savings and opening revenue flow, it is a difficult path to tread for yet others. So, to help you out, we have come up with a list of some of the best, most ingenious ways that you can raise money to support your dreams of kickstarting your very own enterprise.
Also, read A Basic Guide To Developing A Fundraiser For Your Business
Table of Contents
1. Start-up Competitions
Being a potential business owner, you must definitely have heard of Shark Tank. Well, start-up competitions work similarly to the reality TV show, except the stakes are higher, for there are only a couple of winners selected from thousands of entries. In such contests, the applicant has to prepare an effective marketing pitch for a panel of multiple investors. Competitions like these include MIT 100K, Startup World Cup, Arch Grants Competition, European Social Innovation Competition among many, many others. If you believe that your entrepreneurial idea is unique, innovative, and has the potential to be an absolute success, then entering one of the many start-up competitions is undoubtedly the way to go!
2. Crowdfunding
If you haven’t been living under a rock, then you must have come across the concept of crowdfunding. This method has been used for a variety of purposes like healthcare, relief support. In the business world, crowdfunding basically refers to the situation when many individuals invest small amounts of their money in order to finance a fledgling entrepreneurial venture.
Its growing popularity over the past decade can be attributed largely to the proliferation of social media platforms like Instagram, Facebook, and Twitter. Websites like Kickstarter, Indiegogo, Patreon are some great places to start fundraisers. You will be surprised to know that many successful companies have been, at least in part if not fully crowdfunded! Just to name a few, companies like Oculus, Flow Hive, Tile, Fidget Cube, Pebble, and Ouya had been crowdfunded to massive success.
3. Government Funding
The governments of most countries offer financial help to small, self-starter businesses, and especially those ones that aim at developments in the technological sector, or support socially beneficial causes like alleviating poverty, providing better healthcare, or boosting the country’s supply chain logistics, etc.
There are often annual calls for grants being offered for a particular fiscal year, which are announced on the respective departmental websites. So, a good idea for fundraising for your business would be to keep regular track of such announcements online and to respond to the appropriate ones with a tailored, well-composed application to boost your chances of selection. It is also important to know the criteria for online small business loans offered by the government to check your qualifications and meet all the requirements needed.
4. Vendor Financing
Vendor financing or trade credit is a pretty straightforward and no-nonsense fundraising idea for starting a business of your own. Investopedia defines vendor financing as “the lending of money by a vendor to a customer who uses that capital to purchase that specific vendor’s product or service offerings.”
Such sponsorships work as a two-way agreement, where the business owner can offer unique creatives, make scope for unparalleled exposure, and pitch ideas to the vendor that might help boost the latter’s sales in exchange for tangible products that can be added to your inventory— the possibilities are endless. These deferred loans, however, also come with a steep interest rate, so make sure to secure your finances as soon as possible to avoid piling up debt that might cripple your endeavor.
5. Explore Peer-to-Peer Lending
Peer-to-peer or P2P fundraising has been gathering traction over the past couple of years. Investopedia defines it as “enables individuals to obtain loans directly from other individuals, cutting out the financial institution as the middleman” It is a low-cost effort with the potential for huge returns if done properly. These days, many websites act as middlemen between loan seekers and lenders, with companies like Peerform, Funding Circle, Prosper, Upstarts, and Payoff leading the way with low rates of commission. This is also a great option for those investors who are looking to diversify their portfolio while adding extra income.
6. Social Media Test Run
If your business is still in the planning or developmental phases, or in a fledgling state, a good idea would be to do a test run on social media. Meticulously plan out your online marketing strategy and develop a dedicated social media campaign spread out across platforms like Instagram, Facebook, YouTube, and others to test and boost your engagements, content feedback, popularity, and market. With the growth of your business, you can create specialized creatives and targeted paid ads which will provide you the access to a wider client base, generate more buzz for your business, run lucrative and attractive offers for buyers, and also create the opportunity to collaborate with fellow business owners to grow your reach.
Final Takeaway
While building your business empire one tiny step at a time may seem like a daunting task, keep in mind that there are many ways of fundraising your seed money that will make your work infinitely easier. The key lies in tapping the appropriate resources for your particular venture, making the right connections, networking relentlessly without losing the passion, and at the heart of it, having the ability to sell your bankable idea to potential investors. The one thing which you should always keep in mind at every step is: Think outside the box!
