Seed funding is what it all begins with. But that’s just the first step! When it comes to setting up a whole new business plan of your own and ditching the idea of working under someone. A master plan to get rid of a dominating boss, a quirky colleague, or obligated timings of the job, there crawls in an idea of the startup. The word startup holds a lot of value in it, from emotions to finance. Startup covers it all. Doesn’t having your own business seem like a dream? No boss, no obligations- Only you, your vision, and the execution of the master plan you chalked out for the world.
Well, how to make this dream come true? Will your baby business survive millions existing already in the big sea? In a country like India where every weekend someone is plotting up the map of success for their business to blow up, another one backs the wrong horse. Ever wondered why it urges people to take a massive step when it comes to startup? Leaving the existing job, investing an enormous amount of money and the risk of starting from scratch, and much more. This is where concepts like seed funding, pre seed funding, angel investors and grants come in.
Having a little business but of your own is surely a fascinating Idea, but what comes next?
Making the dream a reality
It’s an absolute bliss if the idea is self-motivated and innovative, but when you are ready with a vision and a flow chart in your hand with how your plan will be executed you need to make sure that it’s funded up to scratch. Startup funding may seem like an arduous task, precisely when your newly born venture needs more capital than a couple of laps. Unless the funds are rolling in for a good while, it becomes difficult to handle the payouts, operations, and other valuable aspects without having a smooth cash flow. This is where funding plays the role, for you to operate evenly and successfully.
Now getting on to how your master plan will be funded, there are funding stages, which is obvious. Everything has stages- from funding your business to growing it.
The first steps – know the types of investors
At the budding stage of your little venture, the right tick mark on your to-do list should be on the angel investors; these are people who will listen to the pitch of the glorious business you are about to convince them to invest in. Anticipating the favorable union, they will also invest in your innovative idea. Now, these are the saviors, they invest when nobody backs you up. They usually provide capital support at the initial moments to give inertia to your startup; it can also be called pre-seed funding. Now, this angelic entity gives you seed money to start with, like seed funding for your association to bloom. It’s a form of security offering where the investor invests capital in your incorporation in exchange for an equity stake or convertible note stake in the company.
Now some people lend money when they’re truly intrigued by your business idea after surveying through possible chances of your company rooting into the market, you better pitch them good! Well, Why? Because usually these people called venture capitalists invest in a lump sum and are known for expecting high returns. Now, you know.
Personal funding options
Apart from all the external investors, who else might invest? Perhaps, your family or friends. This is the safest investment you can find as the one lending you the money knows you enough to put their trust in. They stand out to be a reliable alliance besides, you always have them around.
There are other ways to roll in the capital too; one of the ways among these is called crowdfunding. This is a method where a large number of individual investors with collective efforts raise capital. Crowdfunding is the practice of financing a project by raising a small amount of money via certain websites which are dedicated to collecting investments from host investors just so they can help budding startups to blossom.
The government does believe in people with vision and is willing to support young minds with aspiring startups. This is why they have come up with schemes to help nascent ventures with schemes that provide collateral-free debt to such startups and encourages them to gain access to a competitive approach.
Small business loans from banks are the ethical way of acquiring capital for startups, which may seem easier for some startups to get than venture capital, which can be a lengthy and herculean process. They’re a great alternative for startups that already have propulsion. Because while venture capitalists are all about taking courageous steps for the potential of a big reward, traditional banking foundations are more concerned with their funds. And unlike taking angel investment or venture capital money, taking up a small business loan assures full ownership of your startup.
Now there are multiple grants, which one you should get your hands on? Government grants for small business come in three forms: Federal, State and Local.
The grant which usually offers the most money is called federal and also, has the most competition. They’re pretty certain and usually associated with a government agency for qualifying for the money and what they expect you to do with it.
State grants, contrarily, are usually less money than federal grants but also that depends on your state which can be less competitive.
The state government may assist the federal government to operate the money that’s been dedicated specifically for small business grants.
Local grants tend to be even smaller than the other two as it’s on the local level but they perhaps be easier to get. These grants are dedicated to improving the local community. So, if your startup is centered on bettering up the town, you exactly know what to look into.
Among all the options, what suits you the best? Is it worth giving it a try?
There are multiple potential ways of funding your venture, several sources to fuel your vision of a successful business running through the years. But it’s important to identify the suitable funding which is favorable to your business plan, contemplating the flow chart you designed for yourself in the beginning, remember? Rethink and examine all the types of startup funding before you plan to execute it.
As no matter what funding you’ll land on, it will be the paces that will lead you to success!