10 Startup Funding Options to Raise Startup Capital for Business

You might have a brilliant idea for a great new business. But, without the money to fund it, it’s nothing more than a pipe dream – No different from spending your days building castles in the sky.

Now, here’s where the problem lies.

New entrepreneurs will hardly ever have enough cash saved up to get a business off the ground. It may also be difficult to approach mainstream lenders – like banks – to loan you the money when they don’t have anything to go on.

After all, your business is a startup, and banks, well, they usually, like to fund companies that don’t already have some form of trading history.

It’s not all doom and gloom though. There are plenty of alternative funding sources available for you to consider. Here are 10 startup funding options you can explore to raise startup capital for your business.

1. Angel Investment

Individual investors who have surplus cash lying around may be keen on investing in startups and businesses involved in up and coming technology. These individuals are known as angel investors.

It could also be a group of investors who pool their resources to help startups like yours. Keep in mind though that they usually need to have a stake in your business. Equity could range anywhere between 20 and 30 per cent.

2. Bank Loans

Although banks aren’t generally known to fund startups, it doesn’t mean they won’t, under the right circumstances. You just need to know how to go about it.

Some banks have various products in place designed to offer financial support to both growing businesses and startups alike. Those that offer this kind of assistance usually have two types of loans.

You could apply for a Working Capital Loan where you would pledge an asset as collateral to access funding. The other option would be to apply for a Funding Loan where you would submit a comprehensive business plan, as well as the details of your valuation, for them to review and determine whether you qualify.

3. Bootstrapping Your Business

Bootstrapping is another name for self-funding. It involves funding your startup using your finances like savings or getting cash from your friends and family. This is always the go-to option, particularly for first-time entrepreneurs.

In addition to this, it makes it easier to get startup funding from external sources in the future. An investor would be more willing to invest in your startup if they see that you were willing to put in all your money in seeing your vision come into fruition.

4. Business Incubators and Accelerators

When you’re first starting, you need proper guidance to steer your business in the right direction. These formative stages are critical to the success or failure of startups. That’s where business incubators and accelerators come in.

Their function is to nurture and to grow your startup, to ensure that it’s on solid ground throughout every stage of its lifecycle.

Incubators work with new companies to help them take their first steps in the business domain. Accelerators, on the other hand, support existing businesses to help take them to the next level.

The best thing about them is that they provide excellent opportunities for business owners to network and make connections not only with mentors but also with investors looking to invest in startups.

5. Contests

If you have an innovative idea but lack the cash to make your vision come to life, there are lots of amazing contests you can participate in to win a significant amount of money. It is also the perfect opportunity to give your startup the exposure it needs to attract investors who see the potential in it, even if you don’t win.

6. Crowdfunding

This method of raising startup capital involves getting investment from a group of people or entities – a “crowd” – at the same time. It involves sharing your business plan and goals and justifying why you need X-amount of money.

This is typically done on an online platform. Any person/entity interested in it would then donate or buy a certain quantity of the product to help you get the money you need to set up.

7. Government Assistance and Funding

The Australian government has lots of assistance and funding programs designed to support startups and business owners in achieving their goals. Some of the options worth exploring include:

  • Concessional loans
  • Grants like the South Australia Export Accelerator
  • Innovation
  • Market entry funding
  • Wage support

These types of financial support are usually available from Federal, State, and Territory governments alike.

8. Microfinance Lenders

If you want to launch your business but don’t have access to conventional banking – for whatever reason, such as a bad credit score – going the microfinance route is a viable alternative. This is ideal for anyone looking to get a limited amount of funding, that they otherwise wouldn’t have access to through any other method.

9. Venture Capital

Unlike individual angel investors who invest in startups in exchange for equity, venture capitalists are professionally managed funds that invest in companies that exhibit huge growth potential.

They evaluate startups from a scalability standpoint and will usually invest for a limited time – 3 to 5 years. Before they invest, VCs look for certain growth markers, including the strength of the management team and the stability of the business in the existing economic climate.

10. Other Startup Funding Options

Other short term capital sources worth looking into include – using a business credit card to get instant loans, selling assets or stocks to raise funds, or even pre-selling your products to willing buyers.

You need to get creative if you hope to get the amount of cash you need to get your business off the ground and expand your customer base.

Stay Ahead of the Game

There you have it – 10 startup funding options to get your business off the ground. If you want to stay ahead of your competition, you may need more than one funding source. This increases your business’ chances for survival by limiting over-dependence on a single funding source.

With that being said, if you’re looking for startup capital in the form of an unsecured business loan, use our online tool to connect you with any of the 70+ non-bank lenders and get the cash you need in as little as 2 minutes!

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