Funding is always a primary challenge when founding a startup, as getting off to a good start involves acquiring the right tools and resources which of course costs money. It goes without saying that having good business credit helps, but nowadays there are plenty of options for startups of all sizes. Furthermore, if your business is backed by a solid plan and offers the promise of becoming highly lucrative, you may be able to obtain assistance from third-party financiers via a variety of different platforms and techniques. With that said, here are 4 practical ways any startup can maximize its chances of finding funding fast:
1. Asian Lenders
Did you know that Chinese lenders are maintaining some of the highest loan approval rates in the world? Many international entrepreneurs have turned to Asian funding specialists like Capital Match to obtain hefty small business loans without the same level of scrutiny that would come with a conventional loan application elsewhere. In addition, the loan amounts can be quite generous and repayment terms are kept relatively fair considering the ease of approval.
2. P2P Lending Networks
If traditional banks and lenders seem out of reach, you may want to consider joining a peer-to-peer (P2P) lending network. If you have a good business plan and/or metrics to prove that your company is worth investing in, you may be able to obtain a generous loan from a private lender. Although you shouldn’t expect millions going this route and interest rates will be higher than normal, it’s possible for a startup to raise funding in the area of $10,000 – $250,000 through P2P borrowing efforts.
If you’re developing a product or service that you think people will want to invest in, you may want to take your idea to a crowdfunding platform like Kickstarter to build capital and recognition for your startup. Although there will be a fair amount of effort involved in designing and maintaining a crowdfunding campaign or even a fundraising campaign, it can be an excellent source of funding because there are no specific repayment terms since the funds are essentially considered donations.
4. Angel Investors
Finally, one of the best ways to sufficiently fund a startup is to have it backed by angel investors. You’ll need a professional business plan, financial projections, a strong pitch, decent credit, and a personable approach, but if you can pull it all off, you’ll have some real power players in your corner. However, the disadvantage is that, in most cases, the investor(s) will automatically own a share of your company, so you’ll be paying the price of “building your house on someone else’s land.”
Avoiding the Bootstrap Trap
Finally, it should be noted that bootstrapping – operating without any form of external funding – is rarely the most efficient approach. Starting out organically will almost always result in slower growth and without a much-needed boost your company might even fall victim to a negative outcome in the long-term. Thus, if the goal is to “hit the ground running,” utilizing one of the funding methods mentioned above would be the best bet.