The 5 Ways to Finance Your Startup

There are several ways to raise money for your StartUp; Here in Tradenligne we have selected five of the most common and reliable:

1. Crowdfunding

The Crowdfunding is becoming one of the most popular for raising capital. The concept is simple: there are different platforms where you can showcase the project and, if this is appreciated, collect resources financed by the “Crowd”, i.e. ordinary people. To date, there are two main methods of crowdfunding: the reward-based and equity-based.

Finance your Startup
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The first is to pay back its investors with a premium (which may consist of a product, an invitation, a thank you or any reward). The second involves a sale of part of the property of the project investor, obviously so promotional to invested capital. Kickstarter, Indiegogo and fundable 3 are among the most popular sites and authoritative crowdfunding.

2. Angel Investor

Once achieved success, often that a business owner you look around and decide to invest part of its resources in projects of Startup. This type of investor is called “Angel Investor”, precisely because in these cases the investments are made without a specific intent to get a return in the short term. The advantage of being supported by an angel investor exceeds the economic factor. The advice, relations and skills of the latter are worth as much as a contribution of monetary type. Among the channels to find an angel investor mention Golden Seeds, Tech Coast Angels and Investors Circle.

3. Friends and Relatives

Your family will surely want your project to be successful, and could therefore be said to be willing to share a portion of the same. Often, however, it underestimates the risk of using family and friends as a form of financing without knowing for example that over 50% of small businesses fail in the first five years, due in most cases to factors entirely outside the control of the owners. Make sure not to star by borrowing money which the lender cannot do without is important. A good number of successful companies started with a loan from friends and relatives; having said that, it is important to be aware about the pitfalls and costs that may arise in difficult times. The risk of ruin personal relationships is high, as well as the rewards, however, if it were possible to increase not only their wealth, but also to friends and family.

4. Venture Capital

The “venture capitalists” are designed to invest in companies in the early stages of their development and high growth potential. Traditionally, venture capitalists have almost always asked ownership shares in exchange for their funding. However these days prefer to offer a mix of equity and debt. The idea behind the venture capital is to bet on more projects, including the flush of success. About 3 out of 4 companies that receive venture capital fail. For this reason, generally, venture capitalists who invest in startups that operates in sectors with high growth potential.

5. Commercial Partners

The secret here is to rely on a partner who can split the cost of starting the business. Of the top 500 companies of Inc. magazine, 28% received a grant paid by a co-founder. When selecting a partner for an activity you need to ensure that the objectives coincide. Financial partners are likely to have a bearing on the direction of the business. It is therefore generally good practice to make a deal buy-out to take effect in case there was some failure relational. The partners in this case will have to accept a proposed buy-out in a time period set or commit to liquidate the shareholder.

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