Search
Close this search box.
Blog » Business Tips » Are You a Startup Looking to Raise Some Funds? Try These 4 Financing Options

Are You a Startup Looking to Raise Some Funds? Try These 4 Financing Options

how to save more money

As a founder, you’re going to face many challenges as you grow your startup. One of the most common challenges is finding proper financing to get things started. Whether you’re expanding your team or developing new products, things can get expensive quickly. In fact, they are usually much more expensive than you anticipate.

That all said, it’s important to be aware of all the potential financing options for your startup. Below are five ways you can finance your business.

Self Financing

Starting a business is incredibly risky. That being said, founders are typically reluctant to throw their own money into the project. They justify this by risking their time for no pay. First and foremost, you should expect to go months without paying yourself. In addition, you are awarding yourself with equity, and as a founder you likely have the most equity by far.

It’s important for every founder to invest some of their own money into their business. In fact, it should be the first place you look when trying to finance your business.

Take Elon Musk for example, he has invested millions (if not billions) of his own assets into his companies. This shows that you’re confident in your product and are willing to put your own money behind it.

Angel Investors

When traditional investors are brought into the conversation, people usually think about venture capitalists. Another investor that is becoming more popular amongst early stage startups are angel investors.

Angels standout from the mix because they are typically more hungry to get their hands in a bunch of different projects. They typically invest smaller amounts compared to venture capitalists, however they are less likely to put contingencies on the funds.

Rewards-Based Crowdfunding

Depending on what kind of business you are building, rewards-based crowdfunding may be a great option for you. In this type of crowdfunding backers will typically contribute a small amount in exchange for some type of reward.

In most cases, this reward is actually the product being built. Larger investments may allow backers to receive additional perks like being able to fly out and meet the founders. If you’re building a physical product, rewards-based crowdfunding is a great way to validate your business before actually building the products. That said, you need to make sure you can deliver on your promises.

The most popular rewards-based crowdfunding platforms in the United States are Kickstarter and Indiegogo. If you want to have success on either of these platforms I recommend you spend the time creating awesome content and deliver a clear message.

Equity Crowdfunding

Equity crowdfunding is when investors will pledge a larger amount of money in exchange for equity in your company. This type of crowdfunding is typically used for more established companies looking to quickly scale.

Crowdfunder is one of the most popular equity crowdfunding platforms in the United States. Keep in mind that equity crowdfunding deals with the actual sale of securities which means a lot more regulatory hurdles to go through. You can take a look at some of the requirements here.

As I mentioned above, financing your business is one of the toughest challenges you’ll face. You need to be resilient and explore all the options available to you. That said, make sure you take note of the four financing options listed above.

 

 

 

 

 

About Due’s Editorial Process

We uphold a strict editorial policy that focuses on factual accuracy, relevance, and impartiality. Our content, created by leading finance and industry experts, is reviewed by a team of seasoned editors to ensure compliance with the highest standards in reporting and publishing.

TAGS
Former CTO at Due
I’m Chalmers Brown and former CTO of Due. I’m a big fan of technology and building financial products that help people better their lives. I have a passion for financial products that help people. I build complex financial infrastructure protocols that help scale financial companies. They are secure and support millions of customers worldwide.

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Categories

Top Trending Posts

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More