Quick Guide to Get Funding for your Startup

You have this great business idea in the back of your mind, but you just do not have the funding to get your idea off the ground. To make matters worse, no one ever explained to you what the secret to raising capital was either. You have heard of people who raised 3-million dollars in one type of fund raising endeavor or other, but you always imagined that sort of thing worked for people more knowledgeable than you. It is enough to provoke you to wonder what the best fund raising strategy for a start-up happens to be.

Chasing The Money

At first glance, it would intuitively seem that the best way to raise money for a start-up is to approach people who actually have money to invest in your business venture. Venture capitalists and angel investors have long been a go to source for all sorts of start-up businesses. It is true that you must approach people who have money to invest in order to obtain the capital you do not currently possess. But, the trouble with directly approaching venture capitalists and angel investors is that they typically require something significant in return for forking over large sums of money to fund a start-up. Generally, to secure their interests, an investor will not only need to be sold on the idea, but they will also often want a minimum of 51-percent controlling interest in a company. This means that the originator of the business no longer controls their business and the direction it will necessarily be driven in.

The Best Funding Strategy

A more recent development in the business funding arena is the idea of crowd-funding. Crowd-funding is a method of obtaining capital from a crowd-funding website. One of the most popular crowd-funding websites is a site called Kickstarter. Generally, an entrepreneur will pitch an idea for a business on a crowd-funding website, provide a back story, pictures, ideas about future growth and sustainable business strategies for their idea, and wait to see if anyone funds their idea. Rather than trading controlling interest in a business for capital, investors who pump money into crowd-funding projects typically expect something in return that is not so threatening to the business owner. They may expect products a company is developing in return for start-up funding. They might expect privileges or some other form of compensation which is perceived to have tangible value. Whatever the form of compensation, crowd-funding is truly a win win situation for both the investor and the entrepreneur seeking to obtain start-up capital.

Jonah Engler is a successful entrepreneur, investor, franchise owner and coffee lover who hails from New York City.