So you have a tech start-up idea that you believe will take off. You have the business plan set all laid out. Perhaps, you have even managed to create a prototype for your product or service. Now you want to take it to the next level, but don’t have the funds.
Many tech start-ups often fail to take off due to funding problems, which has led to many great ideas dying before being explored. However, there are several ways that you can get funding for your start-up.
We have all heard of the word crowdfunding when speaking of novel tech, but what is it?
Crowdfunding refers to the method of raising capital through communities or through individual investors. Crowdfunding could be donation-based, which is where people fund your project as a selfless act, reward-based crowdfunding when people fund your project but you then reward them with the product or service when completed and equity-based crowdfunding, which is when people fund your business but get ownership stakes in exchange.
All these have their own advantage and disadvantage and it is up to you to decide which is best for your business. Crowdfunding these days is done through sites such as GoFundMe, Kickstarter, Indiegogo, and many more.
Small business loans
We live in the age of start-ups and small businesses. Realizing this, some banks have now set up loans that are specifically tailored for small businesses, though many still remain cautious about lending to small businesses, more so start-ups.
However, there has also been a rise of alternative lending companies specializing in loaning small businesses. These could also be a source of funds for your start-up. However, the downside here is that some of these companies are predatory. Thus, do your due diligence before seeking loans from alternative entities.
Incubators and accelerators
Business incubators or accelerators are mentorship programs and communal workshops which often seek to partner with upcoming small businesses.
Often, an established person in business launches these incubators to mentor young upcoming business owners and partner with the best. This can be a great start for businesses, especially tech businesses as many such workshops focus majorly on tech start-up.
At the end of the day, sometimes, all you need to do is tighten your belt and fund the project from your pocket.
So, you can use personal savings to fund your business and create the product or service, which you then sell to a small number of people. You can then use their feedback to improve the product to the point it gains wide attention and begins to be profitable. The downside of this is that, if the business does not succeed, you would have sunken your savings or credit, leaving you with substantial debt.
Generally, when getting a start-up, being completely professional in how you pitch your ideas improves your chances of getting funding from others. That way, even if the business does not succeed, you will not have lost anything except the time spent.
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