Six Ways to Find Funding for Startups
Fundraising Startup is a startup in the stage of raising capital to enable the operation, growth and development of an enterprise. This is an important step towards growth for startups that are not yet profitable or aiming for rapid growth.
A startup uses different types of fundraising at different stages. Those ones…
- Friends and family members
An entrepreneur finds the initial funds for a startup from personal relationships that include friends, family, and acquaintances. These funds used in the early stage of the startup will be relatively small.
- Seed funding
Seed funding refers to the first formal equity funding round. It is the early stage capital raised to explore the idea of the venture, further develop the product or service and learn about the market. Angel investors, incubators, and venture capital firms interested in early-stage investments can all be part of seed funding.
- Angel Fund
Angel investors are high net worth individuals. They provide financial support to small start-ups or entrepreneurs in return for holding equity shares in the firm. A startup's first investors are Aya Angel in Westers, After the friends and family funding stage, their funds are given to the startups before the venture capital companies arrive.
- VC Fund/ Venture Capital Fund
Venture capital (VC) is financial assistance provided to start-ups and small enterprises with long-term growth potential. Venture capitalists are professional firms that raise and manage funds that invest in start-ups and promising companies. Very large VC funding is used to grow the venture quickly.
- Private equity
This category includes negatives in non-publicly traded companies. Private equity is typically used by high-growth enterprises rather than startups. These very large investments are used to make changes in business systems, enter new markets, and acquire other businesses.
- IPO (Initial Public Offering)
An initial public offering (IPO) in which a company issues new shares to the public can help raise capital from ordinary investors. Going public is a very important step for a startup. This is an indication that the size and market share of the business has increased significantly.
Deciding which type of fund to seek depends on the size of the startup and the sector in which the business operates, along with the advantages, challenges, and needs of each type of fundraising. At what stage of growth the startup is and what are its future goals are also important in raising funds.
