Early Stage Seed Funding: Sources of Fund Raising for Startup

You’ve got a brilliant business idea! how about the capital? Fundraising is an essential part of any business. Without the seed funding, you’ll be unable to start your little engine. But the moment you decide to start a business never let money stop you from achieving your goals.

Seed funding helps your startup to set up its business trajectory. In most cases, It decides the fate of a company, Why? because many of them are not able to raise in their early stages. For startups, it is too difficult to find seed funding! But still, there are many sources available for early-stage fundraising.

Sources Of Seed Funding For Startups

Personal Savings and Credit:

Founders are a hardy, headstrong bunch, and many of them want to fund their startup by themselves. Personal savings and credit accounts are the large portions of any startup early-stage fund. Founders must need to identify whether they are willing to invest in the their company before convincing others to invest.

Crowdfunding:

Crowdfunding is rapidly becoming a major source of funding for early-stage startups. It is the process of raising seed capital via web or crowdfunding platforms. There are two types of crowdfundings are available. Donation-based funding, and Investment-based crowdfunding. In donation-based crowdfunding, the person who runs the fundraiser campaign isn’t obligated to payback. Investment-based crowdfunding is an emerging model of crowdfunding, In which businesses seeking fund capital have to sell their ownership stakes as equity or debt in exchange with funds.

Family & Friends:

Many entrepreneurs turn their friends and family members as an initial funder. Why? Because they are the people who believe in you and your ability to execute an idea, and unless you’ve done this before. favorable terms and flexible repayment schedules often help you to stabilize your cash flows in the beginning.

Banks:

If you have a solid credit background or existing assets which you’re able to offer as collateral for a bank loan, then you can consider bank loans as a source of raising startup capital in the early stages.

Sources of Fund Raising for Startup
Sources of Fund Raising for Startup

Accelerators:

Startup accelerators help startups in their early-stage with education, mentorship, and fundraising. Accelerator programs normally have a fixed time duration in which the companies spend a few weeks or few months in education, mentorship, and training in order to avoid problems in long run in exchange of a small amount of equity.

Angel investors:

Angel investors are the ones who invested in the early stages of a startup in exchange for convertible debt or equity. Angels Investors are more critical in early-stage startup funding ecosystem. The greatest benefit of working with an angel investor is that they usually make investment decision on their own.

Fundraising is a painful, but necessary task for startups to grow.