Startup Capital: 5 Ways to Fund Your New Startup

Starting a business is one of the hardest and most nerve-wracking endeavors most people will ever do with their career. Not only are you taking a huge personal risk, but also the financial commitment you must take to get the business going is enough to make failure mean bankruptcy.

With all that said, most entrepreneurs find that that the risk is worth the reward. Working on something you love every day, something that you’ve built from scratch, gives you a feeling of pride that is hard to find in the corporate world. Whether it’s a company with thousands of employees, or a part-time business that helps pay rent, every person should have this feeling.

Since the major hurdle in starting a business is the initial capital, here are 5 creative ways you can fund your next venture.

Take a Personal Loan

While taking out a personal loan may seem like a huge risk upfront, there are some major benefits compared to taking money from an investor: 

1. A) You keep control of your company. Early on, you may not be thinking about this as much. But as your company grows, you’ll be fighting for as much equity as possible. Some of the largest acquisitions left the founders with nothing because they gave away so much of their shares during the lifetime of the company.

1. B) You call the shots. One of the greatest struggles founders who raise capital face is understanding they no longer are the only ones who call the shots. When you bring investors on, especially when you get past series A, you have other people you must include when making major decisions. This can cause you to become an employee of your own company rather than the owner. Personal loans may put more risk on you early on, but they also give you freedom to be in control later on.

Crowdfund

A great way to gain attention, validation and traction with minimal upfront cost is to use a Kickstarter or GoFundMe. These companies allow you to create a page with a video, description, and pricing so you can get early customers without launching. You set a goal, and once that funding goal is met, you get the money raised. From there, you are required to ship your backers the product you raised money for when you’ve finished building it. Not a bad deal.

Use Your Customers

To tech startups, this may be somewhat of a surprise, but it is possible to launch a business with a little thing called revenue. For many service-based companies, it’s possible to charge before you have much of the company created. This allows you to use early revenue to put back in the company until it is sustainable. Payment services like Due allow you to collect payments when you’re just getting up and running, and sites like Squarespace will help you get a site live for under $100. The best way to build a business is by not taking any outside money at all, yet, it seems that route is getting rarer and rarer.

Accelerator Programs

They often say that advice is worth more than money. So why not just have both? With the accelerator model, that’s exactly what you get. Usually geared towards tech startups, these programs offer a small sum of money for a little bit of equity. According to serial entrepreneur Michael Gastauer, “Along with the funding comes guidance, office space, and a final demo day to attract more investors. If you’re a first time entrepreneur and want more than money to start your business, this is a good route to go.”

Corporate Partnerships

Even the biggest companies know they are always threatened by startups that can take more risks. So instead of fighting against them, many corporations are now finding ways to partner with startups. Companies like AOL, Google, and Amazon, all have programs geared towards helping new businesses and entrepreneurs save tons of money when getting their companies off the ground. From things like free website hosting, office space, and email service, sometimes a startup’s best friend is the leader of the industry.