The 10 Most Reliable Ways to Fund a Startup
Seek a bank loan or credit-card line of credit.
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In general, this won't happen for a new startup unless you have a good credit history or existing assets that you are willing to put at risk for collateral. In the U.S., you may find that the Small Business Administration (SBA) can get you infusions of cash without normal backup requirements.
Trade equity or services for startup help.
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This is most often called bartering your skills or something you have for something you need. An example would be negotiating free office space by agreeing to support the computer systems for all the other office tenants. Another common example is exchanging equity for legal and accounting support.
Negotiate an advance from a strategic partner or customer.
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Find a major customer, or a complimentary business, who sees such value in your idea that they are willing to give you an advance on royalty payments to complete your development. Variations on this theme include early licensing or white-labeling agreements.
Join a startup incubator or accelerator.
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These organizations, such as Y Combinator, are very popular, and are often associated with major universities, community development organizations or even large companies. Most provide free resources to startups, including office facilities and consulting, but many provide seed funding as well.
Solicit venture capital investors.
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These are professional investors, such as Accel Partners, who invest institutional money in qualified startups, usually with a proven business model, ready to scale. They typically look for big opportunities, needing a couple of million dollars or more, with a proven team. Look for a warm introduction to make this work.
Related: How to Create an Elevator Pitch That Will Get You Funded
Apply to local angel investor groups.
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Most metropolitan areas have groups of local high net-worth individuals interested in supporting startups, and willing to syndicate amounts up to a million dollars for qualified startups. Use online platforms such as Gust to find them, and local networking to find ones that relate to your industry and passion.
Start a crowdfunding campaign.
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This source of funding, where anyone can participate per the JOBS Act, is exemplified by online sites such as Kickstarter. Here people make online pledges to your startup during a campaign, to pre-buy the product for later delivery, give donations or qualify for a reward, such as a T-shirt.
Request a small-business grant.
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These are government funds allocated to support new technologies and important causes, such as education, medicine and social needs. A good place to start looking is Grants.gov, which is a searchable directory of more than 1,000 federal grant programs. The process is long, but it doesn't cost you any equity.
Pitch your needs to friends and family.
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As a general rule, professional investors will expect that you have already have commitments from this source to show your credibility. If your friends and family don't believe in you, don't expect outsiders to jump in. This is the primary source of non-personal funds for very early-stage startups.
Fund your startup yourself.
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Costs to start a business are at an all-time low, and more than 90 percent of startups are self-funded (also called bootstrapping). It may take a bit longer to save some money before you start and grow organically, but the advantage is that you don't have to give up any equity or control. Your business is yours alone.\
Related: Anatomy of a Kickstarter Backer
You can see that all of these options require work and commitment on your part, so there is no magic or free money. Every funding decision is a complex tradeoff between near-term and longer-term costs and paybacks, as well as overall ownership and control.
With the many options available, there is no excuse for not living your dream, rather than dreaming about living.
