Top 12 Fundraising Ideas for Business Startups
It is a good idea to start a business when you have the funds to execute the initial developments. As you get more resources, you can then start thinking of expansion.
However, it is also a good idea to seek funding for the startup you intend to float. Popular fundraising options are reaching out to Venture Capitalists (VCs), angel investors, and crowdfunding. You will learn more about the top fundraising ideas for business startups in this post.
What is Fundraising?
Fundraising is the process of raising specific amounts of money from the public to execute a project, in this case, starting or expanding a new business.
It is a common option when you don’t want to bootstrap, i.e., starting the business with your money.
What are Some Good Fundraising Ideas for a Startup Business?
From VCs to angel investors, several options exist for startups to get an ideal sum of money invested in their businesses.
Here are some of the ways to raise money for your startup:
1. Reach out to VCs
Venture Capitalists (VCs) are continually looking for new startups to provide funds for establishing a business.
These VCs are known to be a group of high-net-worth individuals and companies looking to invest in new businesses.
Before reaching out to the VCs, here are some things to have in mind:
- Evaluate your startup’s growth potential, because VCs prefer providing funding to startups with high-growth potentials.
- The VCs often require shorter payback timeframes, which could be anywhere between 3 and 5 years.
- It is also possible for the Venture Capitalist (VC) to want a significant equity (share) in your startup.
2. Get Funding from Angel Investors
These are individuals willing to take a significant risk on new startups. Angel investors also require a share in the startup or convertible debt.
If you are seeking funds from angel investors, here are some of the ways they operate:
- Angel investors often invest in startups with signs of growth.
- They also offer mentorship for the business’ growth. They benefit more when your business becomes more profitable.
3. Make a Pre-Sale
Stuck on how to raise money for your business? Why not run a presale of some of the services or products you want to offer?
Pre-selling the business allows you to offer specific services to early-stage adopters/users and generate some revenue in the process.
4. Seek Friendly Donations
This is different from bootstrapping, in the sense that you rely on others to generate funds for your startup.
Crowdfunding allows you to seek “friendly” donations from friends, family and members of the public that believe in what the business has to offer.
5. Take a Loan
Banks and other financial institutions may be willing to take a risk to provide funding for your startup.
Business loans can be a good way to fund a new brand but at the expense of higher interest rates and a lot of bureaucracies. Ideally, you will be required to have a good credit history standing and a detailed business plan to get consideration. I strongly advise against taking a bank loan when you are starting a business. This should be your last option, especially for SMEs.
6. Get Involved with a Business Incubator
A business incubator is a program dedicated to providing the resources required to bolster the growth of new businesses.
The incubator provides the following and more:
- Networking opportunities
- Provides smaller amounts of money for the startups
- Entrepreneurship training and;
- Tools to help the business grow.
7. Make Strategic Partnerships
No business is an island. Today, there exist complimentary services and products. Your startup can make strategic partnerships with existing businesses, such as:
- Suppliers and;
- Collaborating with other companies that offer complimentary services and products.
The goal of these partnerships is to create a relationship with industry partners that will come in handy for your startup’s growth. For example, partnering with suppliers and distributors can provide access to credit for the goods you would need to start the business.
8. Take Microloans
If you don’t wish to use the banks or apply for government grants – there is another option. Consider taking microloans from individuals and potential clients willing to invest in your business.
The perks of microloans include faster loan processing and medium to low interest rates. On the flip side, the repayment time is sometimes shorter and the funding is lower.
9. Leverage Government Grants
Government financial programs, such as the issuance of grants, is a good way to raise funds for a startup.
These grants often come with a longer repayment time and you are sure of not getting harassed provided you stick to the agreements.
Some important points to note about government grants are:
- The interest rates are slightly higher than bank loans.
- The grant-processing period is slower.
10. Bootstrap Your Business
Investors would likely be encouraged to provide fundraising for your business startup if your money is also there. Bootstrapping means using your resources to start a business.
From investing a part of your savings to selling some of your assets to raise more funds – bootstrapping is a viable business funding idea.
11. Engage in Contests
Contests offer your startup an opportunity to raise money. They are aimed at offering your new business exposure and on the completion of required tasks, get some funding.
12. Create Viral Promotions
New businesses are coming into an ecosystem laden with lots of competitors. What makes your brand different?
Creating the buzz beforehand can help you gain traction faster – and with this comes more patronage.
How to go about it?
- Create a promotion and offer specific prizes for those who complete it.
- Ask the participants to undertake different tasks, including sharing the promotions on social media.
- You could also organize a raffle draw and reward the participants that won.
- There is also a possibility of asking for donations or giving discounts on products and services during the promotion.
Startups have a lot of ground to cover, especially considering the existing businesses. Getting adequate funding is a major motivation to break into newer markets, create better products and hire a good team.
If you are short of funds and cannot bootstrap, consider reaching out to Venture Capitalists (VCs), angel investors or take a loan.