Photo: Kevin Collins via Flickr
Bootstrapping, family and friends rounds, angel investors, venture capital and crowdsourcing…there are a lot of ways to fund a company if you really want to be an entrepreneur.But before you chase the greens, there are some things to consider.
If you still want to pursue your idea, then you need to figure out which source of funding is right for you. Should You Pursue Venture Capital Or Bootstrap Your Company? Keep in mind, this decision depends largely on the type of business you’re starting.
Also, a lot of entrepreneurs choose multiple forms of funding as their business grows. For example, it may make sense to bootstrap your startup initially, but after one year of draining your bank account, it might be a good idea to secure venture capital as well.
So, here are some options:
Friends And Family Rounds
One reason F&F rounds are worth considering: Friends and families actually give 3X more funding than VCs. Check out all the pros and cons, as well as advice from entrepreneurs who have secured funding from loved ones:
The Do-It-Yourself Method: Bootstrapping
Bootstrapping is favourable because it means you won’t owe anyone anything. Unfortunately, it also means your bank account will drain quickly. Bootstrapping is a good option for people with a chunk of money saved up, a cheap product launch, and a way for their business to make money relatively quickly (for example, if you’re running an advertising-revenue-only business, you may not want to bootstrap). Check out:
Venture Capital and Angel Investors
You can raise a lot of money this way, and you can get the support of professionals who have worked with other startups; venture capitalists can offer great advice and connections. One drawback: they’ll want equity and you’ll lose some of the company’s control. Read:
This is a new form of funding, but it can be very effective for first-time entrepreneurs. Anti-Facebook startup Diaspora raised 6-figured using Kickstarter.com, a site where average joes can each invest a little bit in promising companies. If you don’t want the burden of owing your friends and families (and the guilt you’ll feel if your company fails), this is another good option.
General fundraising tips and success stories:
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