One of the most important decisions for every entrepreneur is financing decisions. There is a need to decide about how to fund the business and the most appropriate source of funding is very important as it can greatly increase the chance of survival of such a startup. For businesses that are already in existence, decisions about how to manage cash flow and acquire assets are equally important. Either ways both companies (existing or startups) have to explore the various fundraising options which includes;
- Bootstrapping: many entrepreneurs start with saved up funds or funds obtained from friends or family. At the very beginning, the personal fund is the most accessible to kick-start the business.
- Crowdfunding: here platforms are set up for business owners to pitch their business ideas or challenges to a community of investors or people willing to support their ideas or cause. Entrepreneurs in using this option will approach licensed crowdfunding platforms where such a business owner will be allowed to pitch the business and be connected to interested investors who may invest in such business.
- Angel Investment: Angel investors are people with a huge amount of capital and are willing to invest it on over the edge business ideas. The investors are called Angels are they seemingly risk investing in early-stage startups.
- Venture Capital: Venture capitals funds are managed by professionals that have a keen eye for seeking out companies with great prospects. Companies to be funded by this option are company already in existence with viable product or services and with great prospect.
- Business Incubators and Accelerators: Businesses that are just starting out can access funds provided by business incubators and accelerators. This are company that helps new and startup companies to develop by providing services such as management training or office space and gives developing companies access to mentorship, investors and other support that help them become stable, self-sufficient businesses. Companies that use business accelerators are typically start-ups that have moved beyond the earliest stages of getting established.
- Winning Contests: Engaging in competitions or contests that requires entrepreneurs to showcase or pitch their business module against other competitors vying for the same funding for their businesses.
- Raise Money through Bank Loan: financial backing provided by banking institutions on loans to individuals who approach them with a solid business plan. Entrepreneurs with a good business plan can approach banking institutions and apply for a loan.
- Loans from Microfinance Providers Microfinance are set up to give access to capital to small-scale entrepreneurs that lack access to conventional banking capital or loans.
- Asset or Product Pre-Sale: Startups can also raise funds by doing away with assets in the companies’ possession that have high financial value, or through product pre-sale before launching your products officially.
- SAFE, or Simple Agreement for Future Equity: This is a funding model created by Silicon Valley startup accelerator Y-Combinator to enable investors and startups settle on a pre-designed contract without the need for protracted negotiations, allowing the company to land seed funding relatively quickly and cheaply.
For further inquiries, should you consider raising funds for your business using any of the options mentioned speak to a member of our team by sending an email to email@example.com
We hope you have found this information helpful. Please note that this information is provided for general informational purposes only and is not intended to be legal advice. No lawyer-client relationship is formed nor should any such relationship be implied. This answer is not intended to substitute for the advice of a qualified lawyer. If you require legal advice, please engage a lawsavvy.