A New Entrepreneur’s Guide on How to Fund a Startup

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fund a startup
fund a startup

Picture this: you’ve come up with a killer idea for a company. You know this one will be a hit with your consumers, and you’re excited to get out there and start building your company up. There’s only one problem: you don’t know how to fund a startup. 

Many small business owners run into this problem. Without a good source of cash, it can be tough to get your business off the ground. 

There are many different ways to fund a startup. We’ll dive into some of the most popular ones here and give you some essential tips for raising money for a startup company. 

Get a Loan

This is one of the most straightforward ways to fund your startup. Need cash? Just borrow it.

Unfortunately, some small businesses (and especially startups) do not qualify for traditional bank loans. 

Thus, it can be important to look for more creative ways to raise funds. 

Crowdfund

This funding method has become more popular lately with the rise of popular crowdfunding websites and the passage of the JOBS Act.

Crowdfunding can be a potent and organic method of raising money for a startup. A tip for crowdfunding is to focus on your advertising, even before completion.

Of course, if you are going to crowdfund, you need to commit to your customers about what precisely you want to produce and how you are going to produce it. 

Also, be careful of some crowdfunding sites. They sometimes will require you to raise the full amount you are seeking to keep any of the money. 

Additionally, you’ll be on the hook for anything you say during the crowdfunding campaign. 

Get an Advance

Some companies will give you a cash advance in return for royalty payments. This is, in some ways, better than getting a loan because you don’t have to repay the same amount of money with interest.

Make sure the royalty isn’t too high, though! You don’t want your investment money to turn into a drain on the resources of your company. 

The money you make from selling your product is the backbone of your company, especially when you’re starting a startup — don’t give it away easily.

Apply to Angel Investors

Angel investors, also known as venture capitalists, invest in businesses in exchange for a share of the company’s equity. Some even do it on popular TV shows. 

These investors can not only provide you with funds, but they can also provide you with valuable experience and connections. 

Make sure you apply to multiple angel investors to find the right investor for you!  

Need More Info About How to Fund a Startup?

We hope these tips have given you some ideas about the most popular ways business owners fund their startups. 

Do you want tailored advice about funding your startup? Check out our Accelerator Program; that’s sure to give you all the information you need about how to fund a startup. 

Armando Vera Carvajal

Armando Vera Carvajal

Armando Vera Carvajal is the Vice President of Product for Newchip, the largest global online accelerator focused on helping startups raise capital from professional investors. As one of the original product founders and pioneers, Armando is passionate about building new products with high potential for global reach and impact. Prior to Newchip, he was as a Research Manager at the Gerson Lehrman Group where he covered hedge fund clients in New York City involved in long/short, distressed credit, special situations, activist, and global macro investment strategies. Armando studied international relations and corporate communications at the University of Texas at Austin, along with global exchanges at the Nanyang Technological University in Singapore and at l’Institut d'études politiques de Paris (Sciences Po). Born in Mexico City, Armando immigrated to the United States of America when he was four years old and grew up in McAllen, Texas. His interests include painting, mountaineering, writing, film, world travel, kayaking, photography, reading, black coffee, running, and inspiring people to become agents of positive global change.

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