Many people dream of starting their own business because nothing feels more freeing than being one’s own boss and managing your own people. However, not everyone has the privilege of having enough funds or even generational wealth to turn their entrepreneurial dreams into reality. Thankfully, there are various channels through which aspiring business owners can find capital for their startup idea.
If you have a good idea for a startup but no funding to show for it, here are some strategies to get funds to launch your own business.
Many financial institutions in the United States offer various types of loans to help deserving entrepreneurs to get their business off the ground. Institutions like Wells Fargo and Banks of America announced that they are committed to helping small business owners gain access to enough capital to help them get started.
If you want to consider real estate investments, why not explore running your own Airbnb? When most people are doing remote work, many are looking for opportunities to get away from their houses and stay in some well-designed home where they can escape from their work lives even for a little. Bigger properties require jumbo loans, and there are mortgage companies that can help you navigate this investment.
Angel investors, also known in other circles as seed investors or private investors, are usually high-net-worth people who provide funding and financial backing for aspiring business people in the beginning stages of building their startups. Often, they provide access to funds in exchange for having some form of ownership equity in the company. These seed investors also usually ask to have a say in how the company or business is run. If you have trusted friends and family who have money to their name and believe in your vision, don’t hesitate to ask them for help.
Here are some additional strategies for attracting potential investors:
- Learn the art of soft selling. Build connections and networks organically; don’t just cold call or email these people. Let the relationships build naturally before you attempt to proposition them.
- Come up with tangible results first before you approach them. Try finding a way to get a customer base without depending on big external investments—it will show your investors that your big idea is workable and profitable.
- Be quick to pitch how they will gain a return for their investment. These investors didn’t make their money simply by believing in promising entrepreneurs; for many of them, their investment is all about the bottom line and only a means to a profitable end. It doesn’t matter who you’re pitching to, whether a rich relative or a venture capitalist (VC)—you need to have a clear plan for who they will get a return for the money they shell out.
For aspiring entrepreneurs who may not necessarily have connections with VCs or potential angel investors, a host of reputable startup accelerators or incubator firms can lend credence to their business idea, provide network connections, and credibility to the entire startup.
These accelerators often have mentorship opportunities that can help aspiring business people smoothen the hard edges of the startup idea. Not all of these companies can ensure that aspiring entrepreneurs will snag investors by the end of the program or partnership. However, it will make their startups much more credible to potential investors. They don’t guarantee funding opportunities, but they improve the odds that a participant’s startup will eventually receive a good valuation.
Another option you can explore is the world of venture capitalism, or approaching firms whose entire service revolves around finding promising startups that can promise a return of three to ten times their original investment within the next five to seven years.
This option is for aspiring entrepreneurs with a more airtight business plan and a clear grasp of where they see their startup idea going in the long term. It’s for inventors, social entrepreneurs, software developers, and other types of visionaries who need as much as a million dollars to launch their startup.
For those who don’t have connections to VCs, visiting the National Venture Capital Association website is a good place to start.
Finding institutions and people who believe in your vision for your business might be the hardest part of launching your business, but it can also be the most rewarding and fulfilling. Save as much as you can, take out loans if you need to, and create strategic alliances—and you’re in a good position to start well.