It’s been some time since we’ve touched on the sources of startup financing – where it comes from and how to get your clutches on it. But today we are going back to the source of a company’s ascension into market success. How? By examining the lifeblood of a company; which is undoubtedly linked to its financing.

Just as a company cannot operate without a stock of human capital and strategic fit with its environment, it needs the ability to meet market expectations in the first place. That in mind, how can our new businesses get the financing they need to grow and compete in chosen industries?

Well, first thing’s first…

Who will Finance my Startup?

There are three traditional sources of funds for your new venture, as brought to us by legalzoom.

1) Family & Friends

In technical terms, family and friends are not ‘accredited investors’, approved to invest due to a certain level of (disposable) income. This protective measure of investor accreditation was implemented to protect investors from being ripped off by stock scams. Although not accredited, a limited amount of family and friends are still allowed to invest, so consider them for seed funding rounds!

2) Angel Investors

Angel Investors are, on the other hand, accredited and actively looking to invest in companies. These investors make use of their own money, tend to invest in groups, and vary in their business and financing savvy greatly. The most sophisticated of which are similar in their business analysis to our next type of investor, Venture Capitalists.

3) Venture Capitalists

Last but not least, Venture Capitalists are professionals who take on the task of investing other peoples’ money in companies. Generally, the sum of money conjured up through Venture Capital is the largest from the three sources and often reaches millions.

But wait, there’s more! This modern age has provided us with mass customization, hover boards, and also…

4) Crowdfunding

Harnessing the power of the world-wide-web, we are now able to raise money from people all over the world in small installments, sometimes creating large pools of money for our cause.

5) Microloans

Another option, as explored by Forbes, would be to procure a microloan (which ranges up to $35,000) from a nonprofit and other companies, and to use that as a jumping off point to start your business.

6) Finance Yourself

Perhaps the most obvious financing option involves self-financing; investing out of your own pocket into your business plan.  Not only would this directly fund your business growth, but it will signal to investors that you are fully committed to your practice.

Our list above is not collectively exhaustive, but it gives a clear idea of the many avenues one can take in order to arrive at a fully financed startup venture. Our advice? Look at all of your options, weigh the pros and cons, and select the optimal financing regime for your situation.

Good luck and thanks for reading!

The Equidam Team