by Samuel Gitukui
As an entrepreneur, the lightbulb suddenly lights up in your mind and you get that eureka moment, the time you finally get a business idea that could work.
Since you are a careful individual, you ran it past your friends and family and they all seem excited at the prospect.
And then the inevitable happens. You realize that you lack the required funds to actually turn the idea into a tangible business; you will need funding and crowdfunding; angel investors or venture capitalists are options that you must very well face.
Crowdfunding comes with platform fees and angel investors are not easy to come by. Even if you find one, there is no guarantee that you will get them to invest in your startup.
Then there is the third option that promises some hope, venture capitalists. However, it comes with a long process without any guarantees. In fact, self-funding and borrowing from family and friends are the two main ways through which startups are funded. Even still, VC funding remains among the most popular method to secure funds for business ideas.
Very few businesses manage to secure VC funding and the numbers get even lower when the business is at the seed stage.
The good news is, there are other options available that most entrepreneurs may not be aware of but offer great alternatives funding the business idea.
Let’s find out!
Incubators
Note that these do not actually offer funding but rather mentorship and guidance. Unlikely as it may appear, incubators are an invaluable source of launching your business off the ground.
Most will offer office space on tenure for between 3 to 6 months but the business enjoys the direction of more experienced individuals that will help avoid common pitfalls.
Corporate Venture Capitalists
No, these are not the same as VC funding. Here the startup is funded by large companies and has the benefit of offering entrepreneurs more freedom in running the business compared to getting the funds from a VC.
However, the company will expect to be involved in strategic decision making and the entrepreneur needs to be willing to accept the fact that their options are limited here.
Peer-to-Peer Lending
Here borrowers and lenders find each other through an online platform. The borrower creates a profile and receives an interest rate and rank. Lenders can then decide if they want to invest with the borrower.
This is another quick alternative to get funding for the business startup with loans anywhere from $1,000 to upwards of $35,000.
Taking a Microloan
Microloans are a simpler and effective method of getting funding for your startup. Most offer loans in the range of $500 to $50,000. However, in the US the average is around $13,000.
These loans can take the stress out helping entrepreneurs concentrate on actually getting the business running.
Purchase Order Refinancing
Here the startup is able to accept large initial orders. The funding company will send the money directly to the supplier and the profit starts flowing immediately to the business.
This type of funding depends on the company that has made the order with the business and is easier than bank financing.
As an entrepreneur, the lightbulb suddenly lights up in your mind and you get that eureka moment, the time you finally get a business idea that could work.
Since you are a careful individual, you ran it past your friends and family and they all seem excited at the prospect.
And then the inevitable happens. You realize that you lack the required funds to actually turn the idea into a tangible business; you will need funding and crowdfunding; angel investors or venture capitalists are options that you must very well face.
Crowdfunding comes with platform fees and angel investors are not easy to come by. Even if you find one, there is no guarantee that you will get them to invest in your startup.
Then there is the third option that promises some hope, venture capitalists. However, it comes with a long process without any guarantees. In fact, self-funding and borrowing from family and friends are the two main ways through which startups are funded. Even still, VC funding remains among the most popular method to secure funds for business ideas.
Very few businesses manage to secure VC funding and the numbers get even lower when the business is at the seed stage.
The good news is, there are other options available that most entrepreneurs may not be aware of but offer great alternatives funding the business idea.
Let’s find out!
Incubators
Note that these do not actually offer funding but rather mentorship and guidance. Unlikely as it may appear, incubators are an invaluable source of launching your business off the ground.
Most will offer office space on tenure for between 3 to 6 months but the business enjoys the direction of more experienced individuals that will help avoid common pitfalls.
Corporate Venture Capitalists
No, these are not the same as VC funding. Here the startup is funded by large companies and has the benefit of offering entrepreneurs more freedom in running the business compared to getting the funds from a VC.
However, the company will expect to be involved in strategic decision making and the entrepreneur needs to be willing to accept the fact that their options are limited here.
Peer-to-Peer Lending
Here borrowers and lenders find each other through an online platform. The borrower creates a profile and receives an interest rate and rank. Lenders can then decide if they want to invest with the borrower.
This is another quick alternative to get funding for the business startup with loans anywhere from $1,000 to upwards of $35,000.
Taking a Microloan
Microloans are a simpler and effective method of getting funding for your startup. Most offer loans in the range of $500 to $50,000. However, in the US the average is around $13,000.
These loans can take the stress out helping entrepreneurs concentrate on actually getting the business running.
Purchase Order Refinancing
Here the startup is able to accept large initial orders. The funding company will send the money directly to the supplier and the profit starts flowing immediately to the business.
This type of funding depends on the company that has made the order with the business and is easier than bank financing.
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