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4 Available Options for Startup Capital

In business and even in other fields, everything has to start somewhere.

4 Available Options for Startup Capital

Even small businesses don’t just spring up out of nowhere and while an idea and the drive to take that idea to the next level can be the perfect catalyst for a new venture, without the money to actually bring those ideas to life, it’s always going to be a non-starter.

That’s where startup capital comes into play.

What is startup capital?

Startup capital is the money a business owner needs to start up a new company. This funding helps the business meet its initial costs (such as office space, equipment, or hiring initial staff) and set aside funds for future expansion.

Raising startup capital is an important step in the process of launching a new business.

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But what startup capital options are available to those with all the ideas and none of the gear?

Business loans

The traditional route would be to apply for a loan but there are so many different types of loan to consider. An unsecured loan is probably not going to be a realistic prospect for brand new businesses, as you have no way of proving yourself and your worth.

For new businesses, secured business loans are going to be much easier to attain, though you might want to consider how much you opt for, given the value of what you could lose if the business doesn’t succeed.

Family and friends

In some ways, there’s less risk in asking for handouts from family and friends but in other ways, the stakes couldn’t possibly be higher.

While your house might not be on the line, your relationships with these people could be and you know what they say about mixing business and family? It might be a faster investment but the fallout could be catastrophic.

Crowdfunding

A more modern idea that has become more popular thanks to the success of websites such as Kickstarter and GoFundMe, crowdfunding asks the general public to fund your venture in exchange either for equity in the company or some form of reward.

The advantage here is the vast amount of people you have to draw from but the drawback is how long it could potentially take.

Venture capitalists

Whereas crowdfunders and family and friends might want to invest in your business and expect only a minor monetary reward, a venture capitalist will take a much more hands-on approach.

They will invest a considerable amount of money but will also expect to have some say over how the business is run. They are also going to be asking for a much larger stake in the company.

If you have major ambitions for your business and require a great deal of startup capital to get it off the ground this might be a legitimate option.

But remember, these guys are not called sharks and dragons for nothing!

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Some other articles you might find of interest:

Make your business rock with these business plan writing skills:

Startup’s Guide to Write a Business Plan

Would you like to know how investors value a startup?

How Do Investors Value a Startup?

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