Finance is the lifeblood of any business but its importance is pronounced multifold for startups. The best of ideas and products cannot find their feet without adequate, timely, and consistent financing. But gaining access to funding becomes a hard task for startups because of an as yet unproven product or service and little to no track record. In this article, we explore some of the methods of funding that startups can access on their way to success.
Crowdfunding: This method involves founders requesting for funding on online portals in the form of small contributions. They can also ask for placing pre-orders for their product. Such small contributions for a solid idea, or pre-orders, can add up quickly into a sizable amount of money. This method can also be utilized as a marketing tool to generate interest in the firm’s product.
Venture Capital: A venture capital (VC) fund is a collection of professionals which lookout for small businesses to invest in. This form of funding is usually available to late stage startups which are already generating revenues but are not large enough to access capital markets. VCs provide funding and their expertise in growing a business in exchange for an equity share in a firm. One their target is achieved or the firm gets acquired or listed, VCs sell that share and exit the firm.
Angel Investment: An angel investor is similar to a VC in terms of taking an equity share in exchange for funding as well as providing guidance. However, unlike a VC, they can provide seed funding apart from on-going support. Thus, angel investors invest in a startup at the earliest stages, something that VCs typically do not do. Also, they offer support to founders in case they face difficult times.
Incubators and Accelerators: Incubator programs train startups and make available a network of mentors and investors as well as access to other startups. They work with forms at very early stages of development. Meanwhile, accelerators work with slightly more mature startups in helping them get to their goals quickly.
Institutional loans: This is the most traditional form of funding as is essential for even new startups whose products are cost-intensive. Startups with low cost requirements also turn to traditional financing once they achieve some scale. These loans can be for funding expansion plans as well as for working capital. Getting a loan from institutions like banks is not easy but it costs less than other sources of funding.
Boston Financial Group offers fundraising as one of its services to startups. It works with founders of these firms and can also help them with business plans if they require that support. Once the core idea is found to be sustainable and a business plan is in place, it helps startups access the aforementioned forms of funding.
Companies can make use of several decades’ worth of experience that Boston Financial Group brings to the table and ensure the required amount of financing for their businesses.
BFAG (Boston Financial Advisory Group) provides the best accounting and financial services. We have a team of experienced professionals who can help you in maintaining your books of accounts.
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