Most tech startups will begin with high hopes and investor confidence. But there are circumstances that can either make or break your new business, both in the tech industry and elsewhere. During their first year in business, research has found that there are a myriad of reasons why small businesses often fail. And without the right amount of business capital, a business will have a higher chance of capitulating. The majority of startups will start to crumble without adequate finance, leading startup owners to start seeking financial backing as quickly as possible for their new brand. Here are some options to consider if you’re in a position where you need additional capital for your tech startup:
Succeeding the first time around with your tech startup means that you’ll need to have some funds saved up that you can easily access, or funds available from friends or family that you can use. This process of utilizing funds from family or friends, or dipping into your own savings account to provide capital for your business is known as self-funding or bootstrapping. And, if you don’t have the money available on your own, then obtaining money from a friend or family member is a unique way to kickstart your brand; it’s often more flexible and informal compared to other options from external sources.
Bank loans may be losing some of their appeal for small business owners, but they are still up there with some of the most popular methods of getting capital for a startup. However, if you want to apply for a bank loan in order to get your tech startup off the ground, then you’ll need to be prepared to put the right amount of work in. You’ll need to ensure that you have a stellar personal credit rating, before you start working on perfecting your pitch and putting together a business plan that convinces the bank you’ll be a low-risk borrower with a business that’s likely to succeed.
With business bank loans becoming harder and harder to get your hands on, there’s been an increase in lenders and investors that cater exclusively to providing startups with the capital that they need. Some may even focus solely on tech startups, giving your business a bigger chance of getting adequately funded. You can use services such as Become to help you find suitable lenders.
Finally, modern technology has made it easier than ever for people to share problems and find solutions using an interactive online platform. Crowdfunding platforms are becoming increasingly popular with individuals pitching their business ideas to get startup funding or trying to get funding to invest in an existing small business. Crowdfunding is a unique method as it allows members of the public to invest a small amount into your business, compared to a large chunk of capital from one investor or lender.
Which of these business funding options would be the most suitable for your company?