5 ways to finance your start up

One of the most often asked question, is how do entrepreneurs find the funding to finance their need. My answer is always the same: “most of the time nobody is waiting for you, but you have to find the right group of investors with the capacity and intrest to finance your business”. This is not easy and cheap at all.

However, there are many additional creative options available for starting a business. If you want to explore all your options to get the finance for your entrepreneurship, I encourage you to think about each of these.

Here is my list of the most common sources of funding today:

  1. Pitch your needs to friends

As a general rule, professional investors will expect that you have already have commitments from this source to show your credibility. If your friends and family don’t believe in you, don’t expect outsiders to jump in. This is the primary source of non-personal funds for very early-stage startups.

  1. Fund your startup yourself. 

These days, the costs to start a business are at an all-time low, and majority of startups are self funded. It may take a bit longer to save some money before you start , but the advantage is that you don’t have to give up any equity or control. Your business is yours. Some of the commission base income you can find on major sites, one of them:

  1. Seek a bank loan or credit-card line of credit.

In general, this won’t happen for a new startup unless you have a good credit history or existing assets that you are willing to put at risk for collateral.

  1. Solicit venture-capital investors. 

These are professional investors, who invest institutional money in qualified startups, usually with a proven business model, ready to scale. They typically look for big opportunities, needing a couple of million dollars, with a proven team.

  1. Start a crowdfunding campaign online. 

This newest source of funding, where anyone can participate is Kickstarter. Here people make online pledges to your startup during a campaign, to pre-buy the product for later delivery.

You can see that all of these options require work and commitment on your part, so there is no free money. Every funding decision is a complex tradeoff between near-term and longer-term costs and paybacks, as well as overall ownership and control.