6 Ways to Fund a Startup (Without Taking a Loan)

6 Ways to Fund a Startup (Without Taking a Loan)

In order to succeed, startups require nothing less than passion, flair, tenacity and most importantly, money.

Entrepreneurial spirit takes care of most of those ingredients, but when it comes to cash, startups have been known to hit a brick wall. But that shouldn’t be the journey’s end.

After all, household names like AirBnB were rejected by investors seven times before they found a solution, whereas Evernote was saved at the eleventh hour by a late-night investor email.

Loans are one option, but they inject just as much risk into your venture as they do money.

To keep that risk at a minimum, here are six totally free ways to fund a startup that don’t involve taking out a loan.

1. Crowdfunding

If you think you can win the hearts (and wallets) of your target market before you actually launch, crowdfunding may be the way to go.

Typically, the startup will produce a video to introduce and pitch their product or service. If it’s of interest to those on crowdfunding websites, people will happily pledge money in exchange for things like future discounts, freebies, and the like.

Websites like Kickstarter and IndieGoGo are excellent examples of crowdfunding websites where many startups have found the funds they need.

2. Venture Capitalists

A venture capitalist is an investor (or sometimes, a small group of investors) who provides either capital or support for startup ventures who do not have access to equities markets.

The National Venture Capitalist Association is a good place to start your search, but also, you may want to think about expanding your professional network to help you find the right investor.

This avenue isn’t an easy one to stroll down, but if you manage to pique an investor's interest, you could be in for a relatively cushy ride thereafter.

3. Startup Accelerators

Finding an investor out there in the big wide world may seem intimidating, so why not try a startup accelerator instead?

A startup accelerator is a company that accepts applications from startups throughout the year, and then periodically invests in a selected few.

YCombinator and TechStars are two popular options that you may want to explore. The former recently invested $120k into just over 107 startups.

4. Equity Crowdfunding

Like traditional crowdfunding, this method gets a number of different people involved in your project. However, instead of offering products or services as incentives to invest, equity crowdfunding sites allow you to sell actual shares of your company.

It’s basically crowdsourced venture capital, and it’s becoming a very popular option for startups across the globe.

Crowdfunder and CircleUp are two equity crowdsourcing websites that you might want to consider.

5. Friends & Family

If venture capitalists don’t believe in your idea, your friends and family might.

You should pitch your idea, ask for advice, and ultimately, offer them an incentive to invest their money. That may be in the form of a share in the profits, access to free services, or something else that you can leverage.

6. Fund it Yourself

Bear with me on this one.

Sometimes, reality is harsh – especially for startups. You may well explore each of the five options above and have absolutely no success. It sucks, but it happens.

But that shouldn’t stop you if you truly believe in your idea, because there is one more solution.

If it comes down to it, you may have to fund your venture by yourself. And if that means having to work part-time (or even full-time) for a few years, then so be it.

Don’t Give Up

Startups are hard to get off the ground, particularly if you don’t already have the funds. However, it’s absolutely essential that you don’t give up – especially if you truly believe in your proposed product or service.  

About the Author

Kaya Ismail is a wordsmith and founder of Employ the Internet. He is a seasoned content marketer with a love for video games and coffee.

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