Startup Funding - Both Local and International
Having a great idea and vision for your startup is half of the way to creating a successful business. But if you don’t have money to invest you won’t go too far. Amounts to launch a startup vary but you do need to have money to begin.
There are many sources to fund a startup. They can be divided into three categories: bootstrapping, debt, and equity.
Bootstrapping. This is how the vast majority of startups begin. Bootstrapping means involving personal savings, borrow money from family and friend, use credit cards, give out sweat equity. Crowdfunding falls in this category and it is among the most popular ways to get funds.
Funding generated from bootstrapping will cover the initial costs of business, for example, registration costs, basic office supplies, website domain. A marketing campaign can be done with funds received from sweat equity and much work. Actually, the longer your business can grow via bootstrapping, the better since you don’t risk much. Usually, time is the most significant investment.
Debt. This is the money you will have to pay back. In reality, there are not so many people willing to lend money to startups. Also, lenders prefer to give money to the businesses they understand. One of the debt types is a bank loan. If you prove that you will return the money, your bank will lend it to you.
It is advisable to spend the loan on things which will bring you money. For example, equipment for cooking if you start a food business. Don’t spend this money on non-recovery expenses (salaries, rent). If money does not make money, how will you return the debt?
Equity. This is a type of capital which you get in exchange for stock in your company. It is much rarer than bootstrapping or debt but still real. Startups like such investments since it gives them time to grow without any pressure to return the money soon. Also, the investor’s network may help to develop a new startup.
However, you give up ownership in your company to another person. This means you will always have to consider the investor’s opinion before making any critical steps. Are you ready for that?
So, there are many sources to look for funding of your startup. Also, as your company grows, it might make sense to involve other sources of investments. Always consider your options and choose what fits your particular situation.
Be patient and good luck with your business!