Startup funding is one of the first major financial decisions most business owners make. It can shape the financial future of your company, so it’s important to understand all your options.
Most startups need outside capital to keep the lights on and fuel growth until they’re profitable. But investors aren’t willing to just hand over cash, they want something in return, either equity (a stake in your company) or debt. At the early stages, the risk is higher, so you’re more likely to get funds from angel investors or seed funds, or venture capitalists willing to take a chance on a new idea. But as you scale and expectations rise, you’re likely to go to a Series A or beyond, which means more scrutiny from investors, and a greater need for proof of your scalable business model.
While there are many different types of startup funding, the most common is a small business loan. But this option comes with the potential for conflicting personal and business obligations, so it’s worth looking at alternative strategies like convertible notes and crowdfunding.
Some companies are able to bootstrap their way to success, relying on internal resources and their own savings to get them started. Others, such as hardware companies, may need to seek external investment to support the development of their products. And even those that can afford to seek investors should still consider utilizing startup accelerators and incubators, which offer education, guidance and connections that can help your company grow.
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