So you have a million dollar idea, but you actually need a couple million dollars to bring it to reality. That is the situation that is faced by many entrepreneurs all around the world. Tech startups especially are faced with this situation because of the nature of their business. This is where comes the role of Enkode Technologies, one of the Best Startup Consulting Firms in Chicago.
There are already big tech giants who are not ready to share their power, so it would be hard for tech startups to compete without adequate funds. For any business to prosper, there need to be adequate funds. Study has shown that lack of funds is responsible for most startups failing after the first year. In order to prosper in your business, you must get connected to Technology Startup Consulting Companies in Chicago.
So the million dollar question now is, how can you raise funds for your tech startup? This article is going to explain just that as you read on.
Bootstrapping simple means using your personal saved up funds for your startup. It also involves getting funding from family and friends that are more than willing to support your business. The amount of money you can get depends on how willing your family and friends are to support your startup, but in most cases it is usually not much.
For a tech startup you would most probably need more money than your friends and family can provide, but their contributions are welcome anyways.
2. Angel Investors
Angel investors are people who control a large amount of money or capital and are willing to invest in businesses and startups. Now before an angel investor would invest his money in your startup, he must be sure of the startup’s profitability.
Angel investors can be a single person or a group of people that combine resources and choose businesses that are worth investing in.
Uber as a startup got funding from angel investors.
3. Getting a bank loan
Another good way to get funding for your startup is through bank loans.
Go to your personal bank and book an appointment with the loan officer. Create a detailed business plan before going to the bank, so that the loan officer can see exactly how you intend to pay the loan back.
The amount of funding you would get from the bank often depends on your history with the bank and also how well received your business plan is.
If the bank rejects to provide you a loan, you can always make another appointment. You could also try out other banks to see whether they would provide you with a loan.
4. Venture Capitalists
Venture capitalist firms are known to help businesses when they are in the early stages with funding. They offer funding in exchange of an equity share.
If you choose to receive funding from venture capitalists, you should be ready to lose a certain percentage of your company. It is usually a small percentage that you need not worry about.
Tech startups are known to be funded more by venture capitalists as compared to other industries. A note of caution when receiving funding from venture capitalists is that they always make the deals to favor themselves instead of you. So you are comfortable with been a little bit uncomfortable in the beginning then this is a good route for you.
Are you popular of social media or do you have a really strong social media presence? If so you might want to take advantage of Crowd funding to generate funds for your startup.
Crowdfunding allows you to seek funding online. Crowdfunding platforms are online platforms set up in such a way that you can pitch your business ideas and tell the online community what you are all about. Investors and people who like your idea then go on to support it by making a pledge to support the business.
An example of a startup that benefited greatly from Crowdfunding is Oculus Rift. Oculus rift created a campaign to raise $250,000 which would be used in making virtual reality headsets. The campaign eventually generated over $2 million. Years later Facebook acquired Oculus rift for $2 billion.
Now your tech startup might not have a story like this, but it just goes to show the power of Crowdfunding.
6. Business Incubators and accelerators
Business incubators are made particularly for startups. Just as an incubator helps an egg to hatch, business incubators help new businesses and startup to grow. These incubators provide programs and funding for startups and you can take full advantage of them.
The business accelerators help to make your business grow faster after it has passed the incubation stage. They also provide funding and mentoring opportunities to startups.
7. Funding from the Government
The government usually comes up with programs that offer startups with capital. Most times, the funding from the government is usually contested for by different startups, so you would need to level up your game to get the funds.
Most times businesses or startups that are looking to get a grant from the government are expected to have a solid fool-proof business plan.
8. Winning Contest
Many big companies run contests to for entrepreneurs to showcase their businesses. Winners of these kinds of contests usually go home with the prize money. Contests like this are very common in the tech world. So if you hear of any such contests coming up, you can prepare to participate in it.
Even if you do not win the contest, there is usually enough media publicity in such contests that can put you in front of those that are willing to fund your startup.
It is usually not cheap to start a tech company.
You might be excited about your new idea or products but excitement is not going to pay the bills. You need money to get your tech startup off the ground, and unless you are the son of a wealthy businessman or woman you would need external sources to fund your startup.
The 8 methods listed in this article can help you do just that.
You can consider Angel investors, Venture capitalists or crowdfunding platforms. In all of this though, you would need a very good business plan so that potential investors can clearly see how that would make their money back and also to see whether they would be interested in your startup. That is why we recommend you to get connected with the leading Technology Startup Consulting Companies in Chicago.