If you need funding for your startup, trying any and every way is a good way to ensure money coming in! This article shows you how to fund a startup creatively.
How to Fund a Startup?
Trying to decide how to fund a startup?
Every little bit counts when you’re starting a new business. You probably already know about all the conventional sources for funding. However, there are many other possible income streams you may not have considered yet.
In this guide, we’ll show you some exciting, unusual ways of securing funding. Keep reading to learn how to fund a startup the creative way!
1. Barter System
If you have a service to offer but no cash, why not try a barter trade with another company?
Bartering can go both ways. You can also allow other companies to pay you in the form of services rendered, instead of in the form of cash. Even better – you won’t have to pay taxes on barter transactions.
When artist David Choe was hired to paint murals at Facebook HQ back in 2005, he set his price at $60,000. Facebook offered company stock instead of the fee, and when they went public in 2012 the stock was worth over $200M!
So make your bartering decisions wisely, and have an eye on the future. Barter for things you really need and try to find situations that are mutually beneficial.
2. Loan Your Equipment
In some industries, you need expensive supplies and equipment to get off the ground. Instead of trying to pay for it all up front, ask a company if they’ll loan you the products on a payment plan. That way, you can slowly pay them off as your company starts to make revenue.
3. Crowdsource Funding
You’ve probably heard of major crowdfunding platforms like Kickstarter. However, if the big ones don’t seem right for you, don’t write off crowdfunding altogether.
There are many unique, smaller platforms that can be perfect for different kinds of businesses. In fact, crowdfunding can also be informal. If you know some well-off people, they might be willing to invest in your project if you present them with the right information.
4. Use Credit
You’ve probably been discouraged from putting too many expenses on your personal credit card. However, a business line of credit is actually a form of “good” debt that you should use if you can.
A business credit card is a great way to start getting the necessities for your startup before it becomes profitable. However, a line of credit gives you even more to work with.
A line of credit is kind of a combination of a credit card and a business loan. Lines of credit are usually marked for a specific purpose, rather than general use like a credit card.
You can get revolving lines of credit, so you’ll be able to use them when you need them. Also, most lines of credit accrue interest only on the money that you actually use, making this a safe type of debt.
Check for startup accelerators or incubators near you. These are a great way to grow your startup fast.
These programs are often started by venture capitalists or investors. They’ll infuse your project with money and time, so your startup can become powerful quickly.
Make sure to double-check exactly what the incubator will offer your company versus what they require, though. You don’t want to partner with one that will expect to keep half your profits.
However, many programs give you access to valuable opportunities without asking for much in return.
Look for industry contests with cash prizes that you can enter. Many entrepreneurs tend to be competitive, so startup contests are common.
The exact nature of the contest will depend on your industry. If you win, you can get a significant amount of prize money sometimes. You’ll also get valuable exposure to new customers and investors.
Even if you don’t win, competitions can be great networking opportunities, and you can still use those connections to move your business forward.
7. Super Angel Investors
If you’ve researched how to fund a startup, you’ve heard of angel investors – but have you heard of super angels?
Angel investors help fund your startup if you meet a few of their requirements. Super angels do the same thing, but more.
These private investors can offer even more cash, and often work with long lists of companies. If you can get one, this is a great source of major funding.
However, many super angels end up becoming venture capitalists, which can be harder to work with. Super angels won’t approach you; you’ll have to find the remaining ones and approach them with a winning strategy to get their attention.
8. Check Out Big Brands
Some major brands have campaigns to support startups. Keep an eye on what you can participate in.
These brands often hold contests where they’ll accept applications and award funding to a number of finalists. These can become valuable partnerships, as well as sources of funding.
9. Apply for College Money
Colleges and universities are a great source of funding – especially if you haven’t graduated yet. Many startup ideas incubate during your college years. Start looking for funding before graduation day to give yourself a jumpstart. Sometimes, colleges even have their own accelerators and incubators. Use your connections at your school to get involved.
Using your college email address will also open doors for you at bigger companies. Approach them as a learning experience and they are more likely to invite you in and teach you some tricks of the trade.
10. Check Local Development Offices
You may be able to get funding from a municipal, county, or state development office. Small Business Development Centers exist to help get entrepreneurs connected with investors.
These opportunities are designed to help build the local economy, so they have an interest in helping your business succeed. You might be able to get grants, loans, and other investments through these resources.
11. Get Social Media Attention
Sometimes, securing funding is all about getting the right eyes on your project.
Create social media content that’s eye-catching and shareable. With enough attention, investors and opportunities will start to come your way.
You may need to invest into a digital marketing campaign or firm, but the right timing and strategy can be huge.
12. Use the Self Employment Assistance Program
This program, known as SEAP, falls under the unemployment assistance category. If you recently lost your job and want to start your own business, use SEAP to help you get started.
13. Try Pay to Work
If your startup is a desirable place to work but needs funding, try accepting donations in exchange for competitive positions at the company.
Now You Know How to Fund a Startup Your Way
There’s no right or wrong way to fund a startup. Try a combination of these ideas, depending on the nature of your startup and your end goals.
Now that you know how to fund a startup, what next? Check out our guide to the stages of startup funding.