Startup funding is essential to the growth of any new business. While there are many different types of startup financing, choosing the right one depends on your business model and growth stage. It also impacts ownership, as investors typically require a share of your company in exchange for their capital. The best startup financing options can help you build a strong foundation for long-term success.
Early-stage funding is the biggest source of money for startups. The first step is getting outside capital to fund your business until it becomes profitable. Most startups will take multiple rounds of financing to get from the seed stage to the point where they can begin scaling and growing their revenue streams. Investors will typically want to see a clear plan of action for how you’ll use the money they give you, proof of scalable revenue, and financial projections that show you’re set up for success.
Angel Investors
Angel investors are individual wealthy individuals who invest their own funds into new startups in exchange for equity. They may belong to an angel investment group or network, but most often work independently. Angel investors provide a valuable source of early-stage startup funding because they are highly accessible. However, they also bring a greater degree of risk as well as additional pressure to grow and reach an exit goal such as an IPO or acquisition.
Another form of early-stage funding is small business grants. While these are harder to come by, they can provide a valuable infusion of capital that doesn’t involve paying interest or giving up ownership like an investor would require.