When there is an idea or a vision for a new age product or a service by a person, this person now becomes an entrepreneur now with a potential idea for a business. This idea or concept could, in fact, have the potential to change the world.
When a person or a group of people want to transform this idea into a startup, they are faced with numerous things that needs to be nailed down such as preparing a business plan, a finance plan, understanding funding option, startup funding stages that the business would go through, the market that the business would cater to, the production facilities and process one has to prepare etc.
All of these phases are to be dealt with one by one by the entrepreneur, but the most important of them all is to first procure funds for the business.
Startup Fundraising
Every startup requires to fundraise for themselves. Knowing how much funds would be necessary and analyzing the various startup funding stages and the financing options that would be needed to look into can help the business prepare for such a scenario easily.
Only with the right plan and knowledge of what and where to look for funds would a business be able to thrive from an early stage.
At the early stage of a startup, the owners would need money to incubate their idea and develop a business plan around it. This initial stage is called the Seed Funding Stage. In the seed funding stage, the startup is nothing more than just a concept that can be marketed to earn profits. At this level, the owners need to work out a strategy to make the business possible; for that, one needs money.
There are several types of funding for startups that are available in the market. Banks and major money lenders may not be the best place to acquire funds as they require considerable asset attachment or would need mortgage assurance.
Most startup owners would hardly have enough money to have a premise of their own or any asset to acquire a loan on it. But if their idea or concept is right – there are many resources that can provide funding just for the idea and its potential to become a business.
Fundraising Strategy for Startups
There are many stages when it comes to funding and financing a business. A startup in its early stage must create a fundraising strategy throughout its lifecycle so as to sustain itself in this competitive market. Below are some of the methods to fundraise in the early stages:
- Venture Capitalists
Venture Capitalists are a group of investors who combine their funds through a recognised and authorised board and offer funds to small startups and enterprises to help them become something of a business. In exchange, they may ask for a stake in equity from the business.
There are many stages of Venture capital financing as a startup can use these funds at multiple stages throughout the lifespan of the business. The stages of venture capital funding can help startups to grow from the seed level into a full-fledged business that is ready to go public.
- Microloans and Private Lenders
Apart from VCs and Angels, these lenders can help in providing small-time funding in exchange for interest on the loan amount. This funding can boost smaller operations such as marketing, purchase of assets, working capital, etc.