Share

women business meeting

If you’ve got the entrepreneurial bug, you may be wondering how exactly you can get funding for the next big idea. Where on earth will you get the money you need to finance your startup?

There’s the most obvious route of course: use your own money. Other well worn methods include getting a bank loan or a loan from family.

But what if you don’t make much money right now and you don’t have the family resources to fund you.

Three Bank Alternatives To Finance Your Startup

Crowdfunding

These days, crowdfunding is a well known way to raise money for everything from buying a car for a man with a 21 mile walking commute to The Veronica Mars Movie Project.

The benefits of crowdfunding are plenty. For one, raising sufficient funds via a crowdfunding site like Kickstarter or Peerbackers is a quick low-cost way to start up.

In addition, it’s a great market research tool and a test of your own commitment to getting the word out. If your project is popular and raises significant funds, you’ve got social proof. This is also a way to build momentum even before you launch your prototype or beta version.

Considerations

On many of these sites, if you don’t reach your target, you don’t get any seed money at all. Most crowdfunding projects never get off the ground. Anywhere from 2 out of 5 to 1 out of 10 projects actually meet their goal on some of the most popular sites. So if this is the only way you have to raise seed funding you’ve got to make it count.

finance your startup box shipping product small business

Entrepreneurial and Startup Competitions

There are dozens of small business startup competitions each year. Many are provided via local business incubators and many have the backing of their respective state.

Startup competitions are another great way to test your idea before you even take it to market. You’ve got to have a solid business plan in place before you can even enter many competitions.

Considerations

Some competitions require you to already have a small customer base and business income before you’re permitted to enter.

Angel Investors

If you’ve got a kick-ass idea, a solid elevator pitch, a killer slide deck and a few early adopters and customers, it might make sense to try to get an angel investor. You could get anywhere from $25,000 to $100,000 to finance your startup. Even better, angel investors understand that most startups fail so they’re more likely to be risk tolerant than your cousin or a local bank.

To find angel investors your best bet is usually going to be through a personal connection. Look through your LinkedIn and Facebook networks to see who you know who knows someone. If you have a business lawyer or accountant she or he may have contacts. Other entrepreneurs you know may have ideas about who to get in touch with or you might reach out to your local small business incubator. If you don’t have the contacts you can also try AngelList or an angel investor aggregator.

Considerations

Remember that an angel investor is buying a stake in your business either through debt or equity. Keep that in mind if you’re not sure that you want to share the wealth.

Join our newsletter

Screen_shot_2017-04-25_at_1.05.57_pm

Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit
About the author


ModestMoney.com Top Finance Blogs

Archives

SSCP   CAS-002   9L0-066   350-050   642-999   220-801   74-678   642-732   400-051   ICGB   c2010-652   70-413   101-400   220-902   350-080   210-260   70-246   1Z0-144   3002   AWS-SYSOPS   70-347   PEGACPBA71V1   220-901   70-534   LX0-104   070-461   HP0-S42   1Z0-061   000-105   70-486   70-177   N10-006   500-260   640-692   70-980   CISM   VCP550   70-532   200-101   000-080   PR000041   2V0-621   70-411   352-001   70-480   70-461   ICBB   000-089   70-410   350-029   1Z0-060   2V0-620   210-065   70-463   70-483   CRISC   MB6-703   1z0-808   220-802   ITILFND   1Z0-804   LX0-103   MB2-704   210-060   101   200-310   640-911   200-120   EX300   300-209   1Z0-803   350-001   400-201   9L0-012   70-488   JN0-102   640-916   70-270   100-101   MB5-705   JK0-022   350-060   300-320   1z0-434   350-018   400-101   350-030   000-106   ADM-201   300-135   300-208   EX200   PMP   NSE4   1Z0-051   c2010-657   C_TFIN52_66   300-115   70-417   9A0-385   70-243   300-075   70-487   NS0-157   MB2-707   70-533   CAP   OG0-093   M70-101   300-070   102-400   JN0-360   SY0-401   000-017   300-206   CCA-500   70-412   2V0-621D   70-178   810-403   70-462   OG0-091   1V0-601   200-355   000-104   700-501   70-346   CISSP   300-101   1Y0-201   200-125  , 200-125  , 100-105  , 100-105  , 1Z0-803  , 400-051   EX300  , CISM   100-105  , 000-106   400-201   642-732   220-902   70-410  , MB6-703   810-403   70-243  , CAS-002  , AWS-SYSOPS   70-462   70-410   2V0-621   LX0-103   70-461  , 220-902   1Z0-144   70-178   70-270   350-080  , 1Y0-201   1z0-808  , NSE4   102-400  , ADM-201   SSCP  , 200-125  , 640-911   000-104   640-692   300-320   350-060   000-089  , 000-017   1z0-808   700-501   1Z0-051  , 70-177   M70-101   300-209   70-461   3002   N10-006   VCP550   70-487   300-320  , 3002   700-501   NS0-157  , 1V0-601   CAS-002