Oct 26, 2021
about 5 min read
The 5 best strategies to raise money much faster for your startup
According to a recent survey, almost 94% of new firms fail in their first year. One of the most prevalent causes is a lack of funds. Every company's lifeblood is money.
Physically and mentally, raising funds for a startup takes a lot of time and effort. You're also not operating the firm when you're soliciting funds. If you don't enhance your efficiency, you'll undo all of your hard work.
Unfortunately, banks are not as generous with loan approvals as they once were, and pitching investors can take a long time - time that you may not have. Consider the five funding strategies below if you need to fund your startup and small business quickly and effortlessly.
1. Consider crowdfunding
Crowdfunding is a relatively new method of financing a company that has recently gained a lot of traction. It's the equivalent of getting a loan, pre-order, donation, or investment from several people at the same time.
How crowdfunding works?
An entrepreneur will use a crowdfunding site to post a thorough description of his firm. Consumers may read about the business and donate money if they like the concept.
He will state the aims of his firm, funding strategies for turning a profit, how much cash he needs and for what reasons, and so on. Those who donate money will make online commitments in exchange for a chance to pre-order the goods or make a contribution.
Best of all, you can acquire the money in a matter of months or less, with the possibility of earning much more than your initial aim. By placing money in the hands of ordinary people who really show interest, this technique can eliminate being rejected by dozens of professional investors and brokers.
If a firm conducts a very successful campaign, it may potentially attract venture capital investment in the future.
Select a crowdfunding platform, prepare a pitch, explain your company idea, and provide incentives to those who are interested. For product-based initiatives, use Kickstarter or Indiegogo; for loan applications, use LendingClub or Prosper.
Then, you may start to fund your startup and small business by using the power of micro-donations.
Self-funding, often known as bootstrapping, is a good approach to get money for a startup, especially if you're just getting started. Without any traction and a plan for possible success, first-time entrepreneurs have a hard time securing capital.
In essence, when you bootstrap, you pay as you go with your earned income and make fiscally prudent decisions like sharing office services, depending on only the most basic equipment, and deferring capital expenditures.
If your firm does not require a lot of initial money, bootstrapping is a terrific approach to obtain financing. You may bootstrap or fund your startup and small business using cash you currently have on hand, or you can enlist the help of family and friends.
Although it may feel awkward to approach your friends or family for financial help, it is a viable choice. Inform your friends and family about the benefits of their participation in your firm, and offer them cash incentives to help you get started.
3. Angel investor
Angel investors are wealthy individuals who are prepared to put their money into startups in exchange for a high rate of return. They are willing to take risks on new firms if they believe there will be a big payoff.
Many well-known firms, such as Google, Yahoo, and Alibaba, were founded with the support of angel investors. This type of investment is most common in a company's early phases of development, with investors anticipating up to 30% ownership.
Another advantage of using angel investors to fund your startup and small business is that they are more eager to provide mentorship than traditional investors or venture capital firms.
Read more: Finding your first investors within 2 weeks
This could be a good option since angel investors provide better conditions than conventional lenders because they are more concerned with the entrepreneur's ability to start a firm than with the sustainability of the enterprise.
Angel investors are also more interested in assisting businesses in their early stages than in making a profit from the company. They may make a one-time investment to assist a firm get off the ground or a continuous infusion to support and sustain the company through its early phases.
4. Build a strategic partnership
As a small business owner, you want to do all possible to ensure the success of your company. However, time and money are generally scarce in the early stages of a company's development.
It doesn't hurt to ask a supplier, distributor, or even a consumer who can benefit from your product or service to get involved.
Help them realize the benefits of collaborating with your startup, and they may be prepared to cut expenses, supply services, or invest directly in your fledgling company.
Small firms, in particular, may benefit greatly from strategic partnerships. Because a strategic relationship may be a critical funding strategy that helps you to grow and compete with larger companies, it's worth looking into.
5. Find yourself a mentor
It's easy to get lost, go down the wrong path, or waste a lot of time on things that aren't as vital if you've never raised funds for a startup before. Find someone who has gone through the process before, understands the ropes, and can help you through it.
For both young and seasoned businesses, a lack of assistance may lead to costly blunders, mismanagement, and unnecessary costs.
A good mentor, according to many successful entrepreneurs, may make all the difference in the success of your small firm.
70% of mentored enterprises endure longer than five years, according to the Small Business Administration. This is significant since 30% of new businesses fail within the first year.
Having a mentor is having a higher opportunity to boost your chances of success and helps you avoid expensive entrepreneurial blunders.
Raising funds for a startup is a time-consuming and difficult task. Make the greatest use of your time to increase your chances of success. There will be a lot of "no's" in this round, but don't worry; if you stay with the course, listen carefully to input, and change accordingly, you will win.
Need additional guidance on how to improve the performance of your company and increase revenue? With Golden Owl assistance, hundreds of businesses have been enabled to prosper by offering them with the most effective tools available, suited to their specific requirements and styles. Please do not hesitate to contact us right away!