There is only one thing on your mind and that’s starting your own business. But at this stage, you might be wondering how do startups get funding USA? When you are an entrepreneur there could be tons of questions on your mind. You would be drawing of a business that can employ thousands of people. You might want to be the next Elon Musk or maybe Jeff Bezos.
How do startups get funding USA? Actually, it depends on what’s easy and accessible for you. Some startups would turn to friends and family members, others would use the personal finances. Some would even go to the bank or maybe the angel investors. And the list goes on!
So if you need to know how do startups get funding USA then you are in the right place.
Let’s find out.
How to Get Funding for Your New Business
You might want to start your business from scratch. Starting a business requires your time, effort, and most importantly money. It’s possible that you have all the time in the world and you are ready for the hard work, but money is missing.
This missing element is crucial for the success and growth of a business especially in the initial stages when you have just started.
In order to get an answer to how do startups get funding USA, consider the following:
Create Making A Solid Business Plan
You heard that right! In order to get funding for your startup, you need to start with a solid business plan. Make a business plan for your business. It’s possible that what you have in your mind is just a bunch of ideas.
When you finally give words to your thoughts, it can be a different story. Thus, a business plan can be your best source of information.
When you make a business plan, you are seeing the projected financial statements. It’s giving you an idea of how your business would be like! Not just you anyone can clearly see the pros and cons related to your business. This business plan can be great for funding.
In order to make a solid business plan, your idea should be great too! You can brainstorm and research business ideas. You can come up with a great business idea for your business.
The benefits of making a business plan are as follows:
- You can show the business plan to the interested investors.
- Your business plan can attract partners for your business.
- Through a business plan, you would know what amount is exactly required for the business.
- The business plan can help you see the financial health of your business. You would know where it stands in terms of financial health in the coming years.
- You can put ideas for the success and growth of your business. A business plan can be like a booklet for you that’s guiding you and serving as a manual for your business.
Now that you know the importance of a business plan for the startup and funding, it’s time to get one for your business.
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#1. Ask Friends and Family Members
When you need emotional support, who do you go to? You might say, friends or family members. Now that you are in need of funding for your business, you can ask your friends and family members to help you.
It also depends on what type of person you are and what’s your relationship with the family members and friends. If you are shy in asking for anything then it would be quite a task for you to ask for support for your business.
Consider the following:
- Ask for support from someone you trust. This person should also trust you! If you were a shady person in the past then forget about getting any support. You’ve to be trustworthy enough so that people would be ready to help.
- Share your business idea with a trusted friend or family member. You can show the business plan and the potential of your business.
- Be prepared! Answer all the relevant questions. If you are able to give satisfactory answers to the questions asked then you would have higher chances!
- You can turn to a rich aunt or uncle who is always there to support you!
- You can ask your parents to help you in the time of need. You can even get money as a gift and thus, there won’t be any hassle of dealing with interest.
- You can ask friends or family members to give you a loan without charging any interest on it.
Thus, if you are considering a startup in the USA then consider asking your friends and family members! See what’s the response. You never know what help you can get! Plus, you might be able to save yourself from the hassle of interest.
Check out, Types of Funding for Startups
#2. Consider Your Savings
A great way to get funding for the startup is by using your savings. It’s possible that you’ve been saving for your dream house. It’s also possible that you were saving for the rainy days. Now that you have a chance to do something about your life, you can! But it involves using your savings.
Whether you want to use your savings for the startup or not is your call. You know what’s best for you so you can decide what’s the most viable option.
You can start a business and might fail, but if you don’t take the chance it’s possible that you might not have any source of funding for your business. You know your financial situation better so you can decide what’s best for you.
#3. Do A Second Part Time Job
When you are passionate about your business then the sky is the limit! You can start a second part-time job to collect the amount that’s needed to start the business. Again it depends on how much amount is required for the startup and for that you need to consult your business plan.
When you know how much amount is required for starting a business then it would be easy for you to collect it. You can even do a home-based job so that it would be easy for you to manage the workload.
You have to focus on the timeline. You should set clear goals for yourself. You should know how much time your business would need to finally take its first steps.
#4. Consider Angel Investors
When nobody is there to support you there is someone out there who can! That’s an angel investor. They would provide the funding in exchange for the ownership equity or convertible debt. There are many angel investors out there who would be ready to support your business.
It’s important that your business idea is strong and that’s why a business plan can be of great help. If an angel investor sees potential in you or your business then you can definitely get the funding you deserve for your business.
#5. Consider Venture Capitalists
You can also get funding from Venture Capital firms. The funds are for the startups, but the companies should be showing potential! Again, a solid business plan can be of great help when you are considering a venture capital firm for getting the funding for your business.
The purpose of venture capital firms to provide funding is to get the equity in return as the startups would be risky. However, if it’s showing potential and there are chances of success then they would definitely consider providing the funding it needs!
#6. Some People Take Loans
The first thought that comes to the mind of a person who is considering a startup is taking a loan from the bank. People go for loans or a personal line of credit. There are chances that a bank can deny the small business loan.
Whatever loan you take, you would be required to pay interest on it. If it’s a compound interest then you should know what you are getting yourself into! Sometimes it’s really hard for some people to get out of the cycle of loans and they eventually go into debt. So if you are a wise person, you would find the best means for yourself and your business that’s not a burden on you.
Also, read, How Tech Start-Ups Make Their Money?
#7. Try Crowdfunding
You are living in the era of information technology and modernization. It’s now possible to get funding from people around the world and it’s possible through the internet via crowdfunding. It can be a great way to start your business.
A large number of people could be there to support your business idea! You have to build a successful campaign. Before trying crowdfunding especially for the first time, you have to familiarize yourself with the concept.
It’s important that you know how successful campaigns work and how other entrepreneurs are taking advantage of this great resource available to them!
#8. Check Government Grants
It’s possible that your government could be offering grants for the new business. These grants are available for young people so you can see if you can qualify. You have to see what are the relevant requirements.
It’s always a good idea to keep an eye on such grants. If you start a business and it becomes successful then it would be great for the economy of your country.
Think about it, your business could become the source of providing the jobs. So it’s important that you check out the resources available for the entrepreneurs by your government.
#9. Consider Partnership
If you are finding it hard to get funding for your startup, you can consider a partnership. It’s possible that there could be someone out there, for example, your colleague who wants to invest in your business.
When you are starting a business and if your idea sounds good then you can expect many people willing to be your business partner. You can even be a business partner with your spouse especially if the spouse can bring the funds easily for the business.
You can form a partnership with your colleague for the startup. Obviously, it depends on what you mutually decide for the profit or loss sharing of the business. It can help in getting the funds you need.
Plus, if the colleague is giving the money, then you would be taking the responsibility of managing and running the company. You have to divide the responsibilities in advance so that it doesn’t become an issue afterward.
Tips to Keep In Mind for Startup And Funding
Now that you know how startups get funding USA, it’s time to keep certain tips in mind.
Consider the following:
- Make a strong business plan that reflects the financial health of the business. It’s possible that you might not know how to create one and thus, you can take the help of a professional.
- You can also get the services of a business consultant to look at your business from a different perspective.
- Start your business when you feel ready! If you can manage a part-time business with your full-time job then you can try that first.
- Some people would like to jump into the business. It’s better if you are taking one step at a time and doing things at your own pace. There is no race or competition, so you have to be focused on your goals.
- It’s important for you to keep in mind that no two entrepreneurs are the same. What may work for one entrepreneur might not work for the other!
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Wrapping It Up
You were wondering how do startups get funding USA! Well, now that you know it’s time to work harder and smarter. You can arrange the funding for your startup as soon as possible. The sooner you get the funding, the better it would be for your business.
Plus, it also depends on what’s your goal and what you are planning to do for the startup. In any case, it’s important that you make a business plan in the beginning. If your business plan is strong then it would be possible for you to get the funding easily!
Bijay is an entrepreneur and start-up founder having more than 14 years of IT industry experience. He is the co-founder of TSInfo Technologies, a SharePoint development company.
A dedicated professional and very passionate about public speaking and also wrote thousands of technical blogs in various technologies. He also wrote a lots of blogs on entrepreneurship, investment, startup, business, manage money tips, etc.