If you’re building a tech startup and you’re short on cash don’t let this define your success.
Financing a business can be your make or break moment, but there are options.
If you’re interested in making carrying a tech business through the finish line but don’t have the money, no sweat, here are 8 ways you can finance your startup.
Modern crowdfunding is an internet tradition where a network of small contributions is made from the web.
In terms of funding, this option can be highly informal and build a loyal audience that serves as patron to your startup.
Therefore, if you can collect crowdfunds from interested internet users, you might be able to supply services to them once your startup has begun.
But, what are the ways to crowdfund? Is it a reliable source of small business financing?
There are several types of crowdfunding. These include:
Each of these bullets can be seen as a style of investment from independent “givers.”
For example, donation crowdfunding would mean investors give you money freely, without expecting you to pay them back.
Reward crowdfunding is another popular avenue. A solid instance of this is Patreon. Patreon is a supporter based system similar to donation crowdfunding, which means that your investors expect a non-financial reward from their investment.
Debt and equity crowdfunding expect money in return on their investment or shares in your business. These two options often pay a pretty penny yet can be a financial burden.
7. Trade Services
One of the options available to startups is to trade their services for investment.
How does this work?
Let’s say that your startup specializes in AI (artificial intelligence), an industry worth well over a trillion dollars, you could trade your AI frameworks in existing startups for cash.
Still, if you’re trying to figure out how to fund a business with no money it’s pretty hard to trade your services, especially if working for yourself is your priority. But remember:
Trading your business’ services for investment is a calculable move that demonstrates what you can do, and how much your services are worth.
6. Instalment Loans
There are tons of loan types out there, many of which have insane rates, but some of the best are instalment loans.
What are they?
An instalment loan lets you pay a loan back over time in proportionate amounts.
This is helpful if you’re working month to month, and don’t have the acceleration to pay off huge loans over a short period of time.
One of the better options out is online instalment loans.
These loan types give you more time to pay off your loan, less total money per payment, and are accessible from the web.
To learn more about online instalment loans, try researching options closest to you, or in a bracket that works best for your startup.
5. Always Keep an Emergency Fund
We’ve talked about passive income, and a solid emergency fund can act similarly.
When building a company from scratch with no money, there will be off-seasons, or more likely, there will be moments when no income is being generated.
A good instance of this can be found in the waiting period between vendors or investors. If you’re waiting on your next investment, it’s important to stow away resources until you’re funded again.
So how do you make a good emergency fund?
The less stable your income reception the higher your emergency fund should be.
This seems intuitive but is often forgotten. If you are not breaking even then your bets should stay low, meaning that you should devote at least 15% of your income to an additional fund that’s kept away.
That said, where should you keep your emergency fund?
Your emergency fund should be put in a liquid account that you can grab from easily.
The reason is, the entire point of an emergency fund is to have quick money available to you when you need it most.
Keep your emergency funds in credit or a checking account that you keep aside.
One last tip: when building an emergency fund be sure to cut your investments or income into a portion you keep aside for your emergency savings.
4. Financing a Business Through Angel Investors
An angel investor is more likely to put money into a risky, “starting from no cash” startup.
An angel is an accredited investor that can be anyone from a high-end attorney to a tech CEO. They typically come into play early in a startup’s lifecycle and are a good option when you have no money to start with.
How to angel investors work?
An angel is a wealthy person who puts money into your startup for a cut of your shares. The cut usually stands at 10%.
It’s that simple.
The repercussions involve a new expectation developed between you and a wealthy investor: you lose some control of your startup and have to live up to your investment.
How do you find an Angel?
There are online outlets, city-to-city local meetups, and events that can help you find angel investors. The main way to find an Angel is to network and research closest to you.
A grant is an organization/governmental sum of money given to a business. This is viewed as a type of investment, but instead of living up to the money being thrown at you after the fact, a startup usually needs to prove something to apply for a grant.
Lucky for you, if you’re in tech you generally can apply to research grants. These installments can involve using your software to complete an organizational problem or performing basic tech research.
Other grants are specific to your identity. There are now grants specifically for women and college graduates that are easy to apply for because they just involve fitting a demographic.
So what is an incubator exactly?
It’s a series of programs, mentorships, and guidance combined. These are often sprung from universities and tech companies that are interested in raising up young businesses.
Here are some things one can do for your business:
Traded office space
Mentoring and programs
Longer time frames of support
Contests give your startup the opportunity to show what your tech is all about. The benefits include:
Earns your company money
Demonstrates your skills and gives your company an active portfolio
Make Your Startup a Safe Built Success
You’ve looked into financing a business. Now you know how to invest, fund, and support your early startup even if you have no money.
Now it’s your time to get your startup the rest of the way.
Take this moment to find all the key ways for your tech startup to make a major mark in the world.
For more tips, tricks, and financing research you should also check out Startupwonders to get you to the top.