Startup Funding Options: 9 Best Ways To Get Enough Money

Starting a business is an exciting journey filled with possibilities. However, finding the necessary financial resources to kick-start and grow your venture can be a challenging part of the journey.

This guide aims to address these challenges by providing you with insights into some of the best ways to secure funding for your startup, including different startup funding options, the potential for obtaining small business grants, possibilities of obtaining funding from BBI, and how to leverage government loans and grants.

No matter if you are starting your journey with no money or if you already have some capital and need more, this guide will provide valuable insights to help you navigate through your funding journey.

How Can I Start My Own Business With No Money? 

Starting a business with no money is challenging, but it’s not impossible. Here are several ways you can start your own business without a significant financial investment.

1. Bootstrap Your Business

Bootstrapping requires you to rely on your own savings or the existing resources you possess. This includes everything from your skills, tools, or even your home as a starting point for your business. It also means being frugal and lean in your operations, such as minimizing your expenses and operating costs.

You have to be ready to wear multiple hats, as you’ll be the founder, salesperson, marketer, and more. As your revenue grows, you can reinvest it back into your business for expansion.

2. Leverage Your Skills

If you have a valuable skill set, such as programming, graphic design, writing, or marketing, you can offer your services on a freelance basis. Start by marketing your skills on platforms like LinkedIn, Upwork, or Fiverr, or even within your personal and professional network. As you grow your clientele and build a portfolio, you can gradually transition into a full-fledged business.

3. Find a Co-Founder or Partner

A business partner can bring not only funding but also additional skills and resources to the table. If you’re an excellent developer but lack marketing skills, for instance, partnering with someone who excels in marketing can be beneficial. It’s essential to find a partner who shares your vision and can complement your skill set. Keep in mind that this also means sharing decision-making and profits.

4. Barter or Trade Services

Trading services is an old yet effective way of doing business when you’re low on cash. If you’re starting a design firm and need accounting services, for instance, you can offer your design services to an accountant in exchange for their services. It’s a win-win situation where both parties get something they need without spending money.

5. Crowdfunding

Crowdfunding platforms like Kickstarter, Indiegogo, or GoFundMe allow you to share your business idea with the public. You can raise small amounts of money from a large number of people if your idea resonates with them. Remember, successful crowdfunding requires a compelling story, an attractive reward for backers, and robust marketing efforts.

6. Apply for Business Competitions or Grants

There are numerous business competitions, incubator programs, and grants available for entrepreneurs. These provide opportunities for you to present your business idea in front of a panel of judges, who can provide valuable feedback, and in many cases, cash prizes or resources to start your business. Check local universities, business organizations, and government agencies for such opportunities.

What Are The Main Startup Funding Options?

There are several primary options for funding your startup, each with its advantages and disadvantages. Let’s explore some of them:

1. Bootstrapping: This involves funding your startup from your personal savings or revenue from the business. It can be a viable option at the beginning, but it might limit your growth if your business doesn’t generate significant profits quickly.
2. Friends and Family: Often, your first investors will be friends and family. They might be more willing to back your idea early on, but remember that borrowing from loved ones can lead to strained relationships if your business fails.
3. Angel Investors: These are individuals who provide capital for a business startup, usually in exchange for convertible debt or ownership equity. Angel investors can also provide valuable mentorship and industry connections.
4. Venture Capital: Venture capitalists (VCs) are individuals or firms that provide funds to startups they believe have high growth potential in exchange for equity. VCs often provide large sums of money, but this usually comes with a loss of some control over your business.
5. Crowdfunding: Platforms like Kickstarter and Indiegogo allow you to raise money from the public. This can be an excellent way to validate your business idea while securing funds.
6. Loans: Traditional bank loans or microloans from nonprofits can be a good option for some businesses. However, they need to be repaid with interest, which can put financial pressure on your business.
7. Business Grants: Various government bodies and organizations offer grants to startups, especially in sectors like technology, education, and healthcare. Grants can be an excellent source of funding because they don’t need to be repaid, but they are often competitive and require a solid business plan.
8. Incubators and Accelerators: These programs provide startups with seed investment, mentorship, office space, and training in exchange for equity. They’re often run by venture capital firms, government bodies, or corporations.
9. Strategic Partnerships: In some cases, forming a strategic partnership with a larger company can help a startup gain financial support and access to resources or clientele in exchange for something valuable – like technology or market access.

Each funding option has its own requirements and implications. It’s important to do thorough research and possibly seek advice from a financial advisor or experienced entrepreneur before deciding which funding option is best for your startup.

What Small Business Grants Are There for Startup Funding?

Small business grants are non-repayable funds or resources provided to small businesses. They are usually given by government departments, corporations, foundations, and trusts.

The UK government, as well as various organizations, offer numerous grants designed to help stimulate small business growth. Here are several options:

1. Start Up Loans: This is a government-backed scheme helping individuals start or grow a business in the UK. Aside from loans, they also provide free business planning to help you get started.
2. Innovate UK: This government organization provides funding for businesses developing new, innovative products, processes, or services. They’ve delivered around £2.5 billion to businesses since 2007.
3. Prince’s Trust Grants: This is an enterprise programme for people aged 18 to 30 who have a business idea and can provide low-interest loans. In certain circumstances, they also provide business grants.
4. New Enterprise Allowance: This scheme provides money and support to those starting their own business. It’s available to those over 18 and receiving certain benefits.
5. Regional Growth Fund (RGF): Businesses can bid for a share of the fund for projects that are also funded privately. It’s designed to help areas and industries in the UK dependent on the public sector transition to sustainable private enterprise.
6. Small Business Research Initiative (SBRI): This programme helps businesses develop innovative solutions to specific public sector challenges. Winning firms are awarded a 100% funded development contract and retain intellectual property rights.
7. Enterprise Zones: If you locate your business in one of the UK’s 48 enterprise zones, you could be eligible for a business rates discount worth up to £275,000.
8. Creative England: This body invests in and supports creative ideas, talent and businesses in film, TV, games and digital media. They offer interest-free loans for business looking to expand.

Can I Get Startup Funding from BBI?

The Broadband BAI, or BBI, is a government program designed to help businesses get high-speed internet, particularly in under-served areas. It is not a direct source of startup funding, but it can significantly lower your operating costs if your business is in a qualified area, thereby indirectly supporting your startup financially.

How to Get Startup Funding by Using Government Startup Loans

The government offers various startup loans, such as:

1. SBA Loans: The U.S. Small Business Administration (SBA) offers loans to startups. Visit the SBA website for more details.
2. State and Local Economic Development Agencies: These agencies often offer loans to promote local economic growth.
3. Small Business Development Centers (SBDCs): These centers provide assistance to startups, including access to financing.

Applying for these loans usually requires a detailed business plan, financial statements or projections, and personal financial details.

Crowdfunding Options

Crowdfunding has become an increasingly popular way for entrepreneurs to raise funds for their startups. The concept involves sourcing small amounts of capital from a large number of individuals, typically via the internet. Here are some of the top platforms that can be used for crowdfunding:

1. Kickstarter: This platform focuses primarily on creative projects, such as films, games, music, art, design, and technology. Backers are often rewarded with the product that the company aims to create.
2. Indiegogo: Indiegogo accepts a wide variety of projects and offers both fixed and flexible funding options. Fixed funding means if you don’t reach your goal, all the money is returned to the backers. With flexible funding, you keep the money raised, even if you don’t reach your goal.
3. GoFundMe: Known for personal fundraising (like medical expenses), GoFundMe is also used by entrepreneurs to raise money for their projects or business ideas.
4. Patreon: This platform is best for creators who offer something of value on a consistent basis. Instead of getting a one-time payment for a project, creators receive monthly donations from their supporters, or “patrons.”
5. SeedInvest: This platform is specifically designed for startups, focusing on technology and consumer-facing businesses. It provides highly vetted investment opportunities and allows startups to raise funds from venture capitalists, angel investors, and the public.
6. Crowdcube: A UK-based platform, Crowdcube allows anyone to invest in startups in exchange for equity.
7. CircleUp: This platform specializes in consumer brands. CircleUp uses a technology approach for sourcing and evaluating deals, leading to a more cost-effective and efficient process.

Each platform has its pros and cons and caters to different types of businesses and projects. It’s essential to choose the platform that best aligns with your business goals, project, and target audience. Also, remember that successful crowdfunding requires a solid marketing strategy to reach potential backers.

How to Get Startup Funding by Using Government Business Grants

Government business grants are funds that the government gives to businesses for specific purposes. They include:

1. Federal business grants: Federal agencies offer various grants for businesses. Visit the Grants.gov website for more details.
2. State business grants: Each state has its own set of grants available to local businesses.
3. SBIR and STTR programs: These are grants provided for research and development in small businesses.

To apply for these grants, you typically need a solid business plan, the ability to detail how the funds will be used, and the ability to report on the results of the grant funding.

Venture Capital Advantages

Venture capital (VC) is a type of private equity and a form of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks, and any other financial institutions. However, it does not always take a monetary form; it can also be provided in the form of technical or managerial expertise.

Here are some key points to know about venture capital:

Risk and Reward: Venture capitalists take on the risk of financing risky start-ups in the hopes that some of the firms they support will become successful. The start-ups are usually based on an innovative technology or business model and they are usually from the high technology industries, such as IT and biotechnology.

Equity Stake: In exchange for their investment, venture capitalists typically require an equity stake in the company. This often involves giving up some control of your business. If the company becomes successful, this stake can be worth many times the original investment. If the company fails, on the other hand, the investment will be lost.

Stages of Investment: Venture capital investments are generally made in the growth stage of a company. However, they can also be made in early stages or even start-up stages. Early-stage investing involves more risk but can result in greater returns if the company succeeds.

Exit Strategy: Venture capitalists make money by exiting their investments after a few years, usually through an Initial Public Offering (IPO) or by selling the company to a larger firm. They’re typically looking for a 3-10x return on their investment.

Network and Mentorship: Aside from funding, venture capitalists often provide valuable industry connections, business advice, strategic guidance, and operational expertise to help a startup grow.

What Are Angel Investors?

Angel investors are individuals who provide capital to start-up companies or entrepreneurs, often in exchange for equity or convertible debt. They are known as ‘angel’ investors because they sometimes invest in ventures that are seen as too risky or early-stage for traditional venture capitalists or banks. The term comes from the world of theater, where ‘angels’ were wealthy individuals who funded productions that might not otherwise see the stage.

These investors can be successful entrepreneurs themselves, executives, business professionals, or just high net-worth individuals who have a keen interest in supporting new and promising business ideas. They typically invest their own money, unlike venture capitalists who manage and invest the pooled money of others.

Angel investors often participate in the earliest stages of a company’s development, such as the seed funding stage, where the capital requirement might not be very high, but the risk is. They might invest alone or as a part of an angel group or syndicate to pool investment funds. While they primarily offer financial support, they can also provide valuable guidance, mentorship, and access to their network to help the business grow.

However, angel investing is not without risks. Since they often invest in early-stage companies, the failure rate can be high. But the potential for high returns, especially if a start-up becomes successful and profitable or is acquired by a larger company, can make it an attractive investment strategy for those with risk tolerance.

Conclusion

Funding a startup can be a complex process, but there are many resources available to assist you. From bootstrapping and crowdfunding to bank loans and government grants, there are various ways to finance your business depending on your situation.

Take time to understand what each option entails and consider which ones align best with your business goals and strategies. With careful planning and determination, you’ll be able to secure the funding needed to launch and grow your startup into a successful venture.