The founder of a company not only needs to study the market well, come up with an excellent business idea and understand how to generate income with its help but also find money to launch a project. There are various options for raising funds, each of which is associated with certain consequences. In the late 2000s, a new alternative for people looking to start a business became available: crowdfunding. Since then it is still gaining momentum. For instance, in May 2021, the Tencent-backed Chinese startup Waterdrop, known as the leading GoFundMe-style crowdfunding platform for medical bills, raised US$360 million through its IPO on the New York Stock Exchange. Crowdfunding is a method of raising funds when large groups of individuals combine tiny individual investments to generate the cash required to get a business or project off the ground. Individuals, non-profits, or startups can launch campaigns for specific causes, to which anybody can donate.
Funding a startup
Obtaining funding for your startup is difficult, especially if you have no product or service to sell. People will not believe your concept. There are a few typical sources of seed funding that can help you kick-start your business.
Personal investment
Self-financing, also known as self-funding, is the initial stop on their entrepreneurial path for many businesses, not only startups. There are no debts or sponsors involved, only you and your commitment, which gives you complete control over the company and is an excellent alternative if your startup is at the concept or pre-seed stage.
Friends and family
You can also start your search with the so-called three F’s: Friends, Family, and “Fools.” These folks have the most faith in you with the least amount of proof.
Venture and angel capitalist
They are often high-net-worth investors who want to support startups with both money and skills. They frequently like taking on the role of advisor and being hands-on with the growth of their portfolio company.
Grants for small businesses
Startup incubators offer coaching, office space, and even assist in meeting with angel investors.
Crowdfunding
Crowdfunding is one of the most secure methods of raising cash because no one is going to ask you to return it. They just want the goods or services that you committed to providing. Crowdfunding can be achieved through several channels, most notably social networking sites or crowdfunding platforms.