It is the startup seed funding season of the year with Y Combinator just finished and Disrupt SF still to come. One major issue startups face is that of having enough funds to actually begin treading down the way of success. To share the ugly truth, there are very less ways in which a startup may be able to collect the amount of fund that they require to set things up for the startup.
Even though a startup requires very less money, in the end, even to manage as much becomes a task to manage. Coming back to the main question, “how do you gather funds to support your startup?”
Here are the three sure-short and safe ways to lead you down the path of raising fund for your ideas and startup.
Bootstrapping is all about gathering the needed fund on your own. Pitch in your savings and ask your partner to do the same, ask for money from a friend or a family member. This way, you will not be in innate debt but will have enough money to start a startup. Also the money you do take from a relative, will not have to be paid in a haste and they (hopefully) will not charge an interest on the money given as well.
Even though this way of gathering funds for a startup may sound a bit childish, it has worked wonders for these famous startups: Github, Mailchimp, Grasshopper, Appsumo, 37 Signals, TechCrunch and Mashable.
Startup Accelerator programs are stages raised specifically for startups, to show their talents and win the hearts of investors. This stage works two-way:
1. Firstly if the presentation or the pitch made is good enough and the product/service offered are innovative, then investors give the give in bucket load of money.
2. Also, once your startup’s and your name gets called out on such a stage that is being keenly observed, then it does work brilliantly for your repute and fame. Post this, whether people use your service or not, they will definitely talk about you and look out for you.
Platforms like these are many and the sort of companies that have benefited from this are: Dropbox, Airbnb, Reddit, Disqus and many more.
One such startup accelerators, Y Combinator (world’s top accelerator) have raise on an average of $1.5 Million.
Benefits of Acquiring Funds from Startup Accelerators Programs
Drawbacks of Acquiring Funds from Startup Accelerators Programs
But these startup accelerators programs, will definitely give you the stage to get into the market and train you to go for your idea.
These are the Top Accelerators
|Y Combinator||SeedCamp||JFDI.Asia (Asia)||500 Startups|
|Techstars||Techstars London||SparkLabs (Korea)||Founder Institute|
|Startup Bootcamp||Open Network Lab|
Venture Capitalists or Venture Capital firms have been the lifeline to many startups in the past and even now, the one last resort for any startup seed funding is venture capital. These firms basically allocates funds to the startups that it founds worthy. With years of experience, it has become easy for these firms to judge from the idea, that which startup ideas can be trusted to grow.
They then choose to provide with the funds and sign a contract using which, in one way or another, they earn their money back. The ways of getting back the money invested from the startup are many:
1. Ask for partnership in the startup when the firm becomes profitable.
2. As for a certain % of Return on Investment. and many more. The idea is to not take back the money directly in the form of cash or check, but to find different means of getting the invested money back.
Benefits of Venture Capital
Drawbacks of Venture Capital
Apart from these basic ways in which funds can be raised; here are some tips to get your startup funded.
These are some tips that will help you in your search of seed-funding for startups. It is important to keep in mind all the aspects of the fund raising while making that critical decision at the right moment. And before wrapping up, here is a last bit of piece from our side, “Good Luck!”
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