This strategy relies on getting small donations from numerous people to fund your startup and gain first adopters for your products. You can attract crowdfunding investors to your offer using any of the online and offline marketing strategies. This fundraising strategy is perfect for startups in need of seed capital necessary to start development or manufacturing.
Incubators help with starting a business. They support startups as they grow and find their feet on the market by providing management training, office space, seed capital, and more. Unlike other business programs, incubators do not admit all applicants and are aimed at newly established and early-stage companies. This translates into high success rates and world-changing solutions, such as Airbnb, Dropbox, Reddit, and others.
Business incubators vary depending on their operational model and goals. Academic institutions and non-profit organizations usually do not require returns from startups. For-profit property development ventures and venture capital companies want to see their investments multiplied. You can find a business incubator that suits your needs in the organization directory of International Business Innovation Association
. Some well-known incubators include Ycombinator, The ICEHOUSE, Techstars, and more. Angel Investors
What is an angel investor? Angel investors are individual investors willing to take high-risk approaches with fewer return guarantees. However, their funding budgets are usually limited and sometimes cannot cover startup needs in full. This fundraising strategy is best suited for getting seed capital and early-stage funding (Series A).
To find your angel investor, start with online platforms, such as Angel Investment Network, Gust, or AngelList. You can also meet them at industry trade shows and conferences as a part of your networking effort. Web Summit, Rise Conference, Startup Grind Global Conference, TechCrunch Startup Battlefield, and others are all excellent places to start. Venture Capital
Companies and funds can invest in your startup on behalf of their owners or members through a venture capitalist managing the daily operations. VCs steadily become more demanding, and they do not risk money unless they get profit guarantees. As a result, this fundraising strategy is more viable for established companies that have already gained a foothold in the market.
To find your venture capitalist, you can send out your pitch decks to VC funds and companies. We'll share insights on the best time to do this later in this post, so stay tuned. However, you will get the highest chance of securing the funds if you are introduced to an interested VC by another investor or if you are contacted directly after your startup gets noticed. ICO
Initial coin offering is not just for cryptocurrency launches anymore. ICO can become a startup funding strategy if you sell tokens or coins to raise seed capital. This approach allows you to forego venture capitalists, bank loans, and stock exchanges. You can even avoid some regulations, although more countries are adopting laws to regulate the volatile cryptocurrency market. You will also need to invest in token development first, and for that, you require technical help from an experienced developer or a full team.
These are the five most common startup financing approaches
for raising seed capital and going through further investment rounds. None of them are without downsides, and you should analyze both benefits and pitfall before committing to one strategy. Whichever option you settle on, you will need to present your idea to entice investors, and that's what we'll cover next.