Startup Funding: Ultimate Guide to Getting your Startup Funded

Pro Business Plans
Sep 15, 2020 · 9 min read

Last Updated: 3/30/2021

Developing your startup idea into a solid product requires more funding and a bigger team. To actualize your business idea, you need to hire employees, pay expenses, and maintain the operation of your business.

Depending on your industry, be it a tech or a business field, your startup can access various funds from multiple sources. It might be difficult for a new startup to secure adequate funds for its operations due to numerous challenges, such as inadequate assets.

In this guide, you will get a lot of insights into various types of startup funding, criteria used by investors to finance startups, the best ways of pitching, and negotiating your startup concept with investors.

Types of startup funding

Startup Funding Sources

SBA loans

You can access SBA loans from various financial institutions, including banks, which act as lenders. All you need to do is spotlight local lenders under the SBA listing from their official website. It would help if you reached a potential and reliable SBA-loan lender to pitch your idea. The lender will get an opportunity to review and give you enough feedback about the loan’s possibility.

All startups do not have a guarantee of receiving SBA loans. You need to meet some requirements for you to secure a loan backed by SBA. To enjoy the full benefits of the loan offered, you need to follow various steps.

Go through the steps below:

  • Come up with a proper business plan, which maps the details and purpose for your startup and its financial requirements.
  • Develop a financial history of the startup. It is typically advisable for existing startups seeking SBA loans to prepare financial statements, including balance sheets and income statements that outline the business’s cash flow behavior for the last three fiscal years. This step is not necessary for new startups.

SBA employs specific criteria when offering secure loans to their borrowers:

  • The business size requirement. SBA considers the size of the startup, depending on its respective industry. Other sectors align with the basis of the number of employees available on the operations or the average receipts for an entire business period.
  • The startup needs to have received various turn downs from other private loan lenders. Lenders can be found on B2B aggregators such as Wimgo.
  • The startup also has to qualify the lender’s requirements after succeeding through the SBA requirements. SBA has its preferred lenders, who serve their roles in offering loans to startups.

Friends & Family

You can approach a friend and pitch your startup concept confidently, detailing all the vital financial and general information about the startup. It may also be difficult for your family to raise a fortune of money for your startup. However, your closest family or friend may get to test your startup concept or even become a target market for the services offered.

It is easier to request your family or friend for some funds back up for your startup, unlike startup investors, for whom you barely have any bonds.

Angel Investors

Venture Capital

It is up to you to fully prepare for the startup pitching by disclosing relevant and necessary details to win the venture capitalists’ hearts. You can do that by drafting appropriate value propositions and market segments for your startup.

Top VC Firms

Crowdfunding

Crowdfunding Webistes

Grants

Have questions about business planning or the capital raising process? Contact our experts at Pro Business Plans by scheduling a free consultation.

What Investors look for in Startup Funding

Investors target several significant factors before investing in a company, such as founders with clear goals and accurate objectives that are likely to be achievable and meaningful. Does the company serve as an excellent fit for investment? How determined is the company team? How big are the company goals? Investors need to be impressed by your company’s actions and ought to predict massive success from the potential company in question. Some of the factors that investors consider before investing in your company include:

A passionate and determined company management team is attractive to any type of investor willing to fund a potential startup.

Passionate and experienced entrepreneurs

The market

Momentum

Business Plan

How to Pitch Investors

Some of the crucial tips in making it all a success involves:

Target Market

Problem/Solution

Market Research

Revenue model

How to negotiate with Investors

Establish conduct of trust

Understand the leverage that you have

Stay open-minded

Conclusion

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