Have an idea but no money to implement it? Today there are many answers to the question of where to get the money to implement a project. In this article, the professional essay helper broke down the main sources of funding and help for startups.
Behind the convoluted term hides an elementary solution: do without external funding and manage on your own. If you want to create a small company and have 100% control over it – it makes sense to be limited to the funds from the car sold or FFF (Friends, Family, Fools). At least for the first time.
The main cons of bootstrapping are independence and complete freedom in decision-making. You will answer only to your clients, and if you do not have capital, you will not lose it. In addition, not all startups who dream about investment get a significant investment.
And the time spent on the development of a selling business plan and the search for investors can be devoted to the development of your idea.
On the downside, you will have to tighten your belts (bootstrapping literally means tightening the straps on your shoes). Along the way, there will probably be a lack of funds and limited resources.
The story “sold an apartment to start a business” sounds attractive only when everything has already worked out. Moreover, bootstrapping involves slow growth. This is not so bad for newcomers: you can not always manage the venture capital wisely, and you can learn on the fly. But for those who expect to scale quickly, the lack of investment will be a hindering factor.
To stay afloat, you need to enter the market as quickly as possible and do what generates revenue. And the most efficient steps are not always the same as the desired ones. On the other hand, it teaches ingenuity and makes you always be on the move.
And pumping different business areas, acting as a marketer, designer, and courier, when there is no money to hire the necessary number of specialists, will help manage the sprawling business. For inspiration – many giants started with bootstrapping: Microsoft, Apple, Facebook among them.
The main advantage of a grant is that it’s gratuitous, and you don’t have to give up a share of the company for that money. In theory, it’s ideal to launch a startup, create an MVP, and find investors on good terms with your first accomplishments. In practice, there is one catch – the grant is not easy to get, and it takes a long time.
Grants are provided by both public and private foundations, organizations, and programs. Most often, this way of financing is given to socially significant or innovative projects and scientific research. But the grant system is now quite extensive, and companies of any level and focus can count on such “free” assistance.
Entering the world of grant support from scratch is not easy. To begin with, you need to find a suitable offer because there are many conditions for participation in the contest: practical industry, skill level, requirements for documents, age of participants.
Writing a successful proposal is an art in its own right. Particular companies can help with these steps, but the money will have to be shared in case of success.
Another disadvantage of grant assistance is accountability. It is impossible to dodge the planned program, even if the benefits of another direction are apparent. And grants are not the best option if you need the money right now: it can take a long time to receive the money from the moment you apply.
But even with all the complications, money without obligation is such a pleasant prospect that many funders are willing to take the time and believe in the best.
3. Startup Competitions
Both are getting a grant, and participating in startup competitions is a very energy-consuming process. Preparing presentations, pitching, and filling out applications can make you miss the main thing – business development. However, such events are full of unexpected and pleasant surprises, so the time spent on them is often justified.
Winners of competitions receive prizes. As in the case with grants, it may be gratuitous assistance, training, acceleration, funds for commercialization, and other gifts useful for startups. Moreover, not only those who come out on the top win in such competitions.
It is a chance for all participants to improve their pitching skills and tell their stories. And with today’s popularity of storytelling, if the idea catches the media’s interest, you can get publicity even without coming out on top.
Real experts get on the jury of startup contests, and their opinion, even a critical one, will help understand what direction to go. And the most obvious thing is that competitions give you new acquaintances, among whom there may be potential partners, investors, and mentors.
4. Incubators and Accelerators
External assistance to startups is not limited only to financing. In the initial stages of project development, it is essential to train the funder, acquaintances, mentors and even increase the team’s motivation.
Incubators and gas pedals can help with all of this to get a business up and running. Both offer programs designed to support startups in a meaningful way but at different stages of development.
An incubator is suitable at the conception stage. It is a unique space where entrepreneurs get a workspace among like-minded people for a fee or on a competitive basis, access to lectures, helpful advice, and find themselves in an environment where they feel comfortable making a business plan, studying the market, and creating their product.
When the team is ready, and the MVP is ready, the business has reached the gas pedal. The main task is to help it develop and grow. Gas pedals also offer an educational program, but more intensive and individual, and sometimes also provide financial support for a share of the business.
Getting into a gas pedal is more complex than getting into an incubator; the company has to undergo a screening process. In this article, we did a detailed analysis of the difference between incubators and gas pedals.
The formats and profiles of incubators and gas pedals are different, so it is essential to pick the one that suits you best. Another bonus of participating in such programs is that after such a “school,” it will be easier for investors to believe in your product, which will increase the chances of financing.
Crowdfunding and Crowdinvesting
Crowdfunding is all about an idea and how you can “sell” that idea. Suppose you have an excellent idea, a creative or helpful project for society. In that case, even if you want to open another bakery but know how to convince people that your muffins will make their lives better, you can try your luck on a crowdfunding platform.
The startup was neat. The modem has run a successful crowdfunding campaign, and in this article, the team shares the results and tips on using this funding tool.
The mechanism is simple: you upload your project to a crowdfunding platform and offer lots of board games you want to create. You raise the necessary capital, make the product, and send it out to the buyers who support you.
The pros are obvious: you get funding, you do not lose control of the business (you can raise money on a crowdfunding platform in a fairly short period), and most importantly – feedback from your target audience. If the money comes in – the product is interesting, if not – perhaps it makes sense to refine it before launching. A successful campaign will also be a good PR.
And now about the cons. Create a selling photo, video, skillfully telling your story – not easy and not quick. To reach the necessary amount with lots of €10-20, you need to attract the attention of the audience, which means you have to work with the media and invest in marketing.
Once the funds are raised, you’ll need to send the product out to all customers – can you manage if there are 500 of them? A crowdfunding site will also require a percentage of the money raised.
Another financing tool could be crowdfunding. The principle is similar. Only in this case do investors get a share in the company, and after you raise the money, you do not send out the finished product but return the money with interest.