A large number of modern startups have enormous confidence in securing funding for their ideas. Things start to change when they’re faced with one of the first major challenges in acquiring sufficient capital for their business. In e-commerce business often they are also confronted with common errors that could easily be adjusted to skyrocket the startup growth.
Let’s say you have researched the market, done a great deal of competitor analysis and set up a foundation for your startup to flourish. Next logical step is to search for investors and companies looking to kickstart your idea and the growing business into the market. Sounds easy? Well, not exactly… Luckily in this guide, we will cover a few of the major ways of acquiring necessary funding. Without further ado let’s jump into it.
Bootstrapping your business
The crucial step in order to maintain the sustainability of your startup is to have an already secured amount of capital that will provide your business with longevity and push it through ‘darker days’ until you find a suitable investor. You can acquire that capital through a friend or a family member that supports your idea.
Pros:
– Easy accessibility.
– No bureaucratic limitations.
– Negotiable interest rates.
Cons:
– Bootstrapping is not a technique that is applicable to small scale businesses.
Online funding platforms
With the growth of new technologies and social media platforms, a new way of funding has emerged called online funding or Crowdfunding. This is essentially pitching your idea and a business model to a wide range of audiences. For example, with this online donation platform, you can start pushing your business to the next level of obtaining the much-needed funding. If you are successful enough, many of the investors will pledge to your startup and provide the necessary funds.
Pros:
– Crowdfunding is essentially a market research technique that tests the market and audiences for a certain product while having an option to collect the funding for your business.
– Potential to appeal to venture-capital investors as the business grows.
– Easy to set up.
Cons:
– If your business idea is not finessed as the competitors there is a possibility of it being overlooked.
Look for angel investors
There is certainly a reason for Angel investors to be called as they are. Essentially these people are willing to invest and pledge the funds to the new rising business with low expectations due to their high liquidity. Angel investors tend to gather together and filter through a large number of business ideas to select the most promising one.
Pros:
– Angel investors in some occasions provide mentorship alongside the funding.
– Willingness to take risks.
Cons:
Lower investment capital compared to some of the venture capitalists.
Pursuit the venture capitalists
Venture capitalists are sole professionals in the business they operate. Their purpose is to look for the most profitable business ideas and invest in them with the expectation of future profitable returns. Their mode of work involves them pushing investment in one strong business idea rather than a quantity of them.
Pros:
– Venture capitalists always keep an eye out for the progress of the business they invested in.
– Mentorship and guidance of the VC bring alongside is often enough to sustain a growing business.
Cons:
– Venture capital operators will remain loyal to the business as long as they reap the profits which are in a timeframe of three to four years in most cases.
– You tend to give up on a large portion of your company profit due to the venture capitalists.
– Venture capitalists are on the constant search for a bigger business with more sustainability and potential for profit. This could be a problem for new startups as often they are not equipped with said stability and sustainability.
To conclude
Involving your business with the tactics explained in this guide will hopefully help you in obtaining the necessary funding to launch your idea and start making a profit. It is most advisable not to stick to one source of the funding, rather focus on multiple sources of investment to ensure that your piggy bank is always filled at any moment and flexible enough if times require so.
