All businesses need funding in order to not just take off, but be able to operate properly. Normally, banks are all for providing business loans to certain companies. However, financial institutions are a bit more hesitant to fund startup companies, especially is these companies are owned and headed by decidedly unproven people or ones with a history of failed companies. In essence, startup business funding is hard to find. It’s even harder to get startup business funding for those with bad credit. So, what does a budding startup do when the bank ultimately declines its request for a business loan? Being declined funding by a bank is not a reason to pack up and close down the shop, but instead an opportunity to explore alternative sources of funding available to finally breathe life into your project.
Here are a few suggestions you might want to consider in finding funding for your startup company:
Investors Particularly Interested in your Startup’s Niche
Startup companies tend to have unique products that they roll out, and their target market is not often the mainstream masses. While most financial institutions use this as a reason to decline certain startups business loans (particularly since the target market is not large enough to guarantee a return on investment most of the time), having a specialized audience can attract investors that are interested or even involved in such a niche. For example, action figure manufacturers tend to support independent producers of toys or developers of new toy products that have unlicensed lines. Startup companies producing or selling products and services that appeal to special interest groups would always attract a specific investor or investors more than willing to fund these companies; particularly if the company is fueled by a really good, new and unique idea.
Startup companies focusing on medical, scientific, tech or similar fields of interest are usually liable to get financial grants. Grants are the ideal way of financing your startup as these are given to people putting up startups without any charges or fees or any other form of remuneration. Of course, given the fact that grants are essentially “free money”, applying for these grants usually not easy. Organizations that provide grants require extremely detailed proposals backed up by solid data and thorough research. Even the most sound of proposals end up being rejected given the volume of applicants for grants and some just have better business plans and proposals than others. Given that, seeking out grants is still one avenue that is definitely worth taking a shot at, especially if you have an idea that you truly feel is worth supporting.
This particular idea may sound ridiculous, but joining contests is a great way to get you closer to achieving funding. Many organizations, like Amazon for example, offer up lucrative financial rewards for startup contests from time to time. Like grants, the cash prize would be a great boon to funding your startup, and again similar to grants, these prizes are essentially “free money”. Joining a contest and winning a contest are two different things, of course. The benefits of winning, aside from the obtaining the prize, are many. The biggest of which is the instant publicity your startup gets from winning said contest, and this would essentially attract investors as a company that has made a splash publicly is usually a smart investment. Losing also yields certain benefits, primarily the networking possibilities your company has. Joining such contests puts your company in contact with a lot of other startups, paving the way for possible collaborative projects in the future. Your quest in raising business capital can potentially lead to a lot more.
The Internet has made a lot of opportunities for everyone. From communication, marketing, buying and selling, advertising and others, the Internet has generally changed the way business works. Now, with sites like Kickstarter, Fundator, IndieGoGo and a host of others, it is now possible to crowdfund your startup. The principle is essentially the same as looking for an investor interested in the niche you’re involved in, but instead of an investor, you will be appealing to the general public to fund your project. These sites have proven to be very useful for small businesses and independent artists who wish to act on their idea but unfortunately lack the financial backing to do so.
Seek out an Angel Investor
Angel investors are investors (usually individuals) that are willing to back you financially in return for a piece of your company. A big piece of your company, actually. These investors are always on the lookout for companies that they can help with raising business capital, but of course, in return they need to get something. These types of investors prefer owning a chunk of the company. A lot of small businesses are usually hesitant in facing the prospect of having someone who was not part in the creation process of the startup own the company in a matter wherein said investor would have a say in the development of the project, particularly since said investor provide venture startup capital. Now, if this is an idea that you are comfortable with, or you don’t really mind having someone to share equity on the startup company, then an angel investor or two is a great option in funding your startup.
There are always several ways to get a job done. If you’re objective is to look for startup business funding sources, then with a little vigilance, you can definitely find these alternatives. The key thing to remember here is that while banks are the traditional way of acquiring finances for your business, there are other options if you really need capital for business. After all, startup companies aren’t traditional companies, so why rely completely on the traditional route? What matters is that you get what you need to fund your dreams, and you should not let any bank that says no deter you from that.