Best Ways to Get Funding for Your Startup
One of the biggest challenges for entrepreneurs and their startups is to get the necessary funds to launch or grow their projects. In this post, we will share different means of financing which could help you get that which you need to take your project to the next level.
But before we start and talk in detail about these means, it is important to note that in order to obtain any kind of funding or otherwise have a better chance of getting it, you must have prepared a good business plan. That said, if you already have a business plan ready, here are the means of financing:
Friends and family
For early-stage projects, one of the options could be to invite family and friends to invest in your project, bearing in mind that the money cannot be returned. Both parties should think of this investment as an unconditional grant, which, perhaps in the not too distant future, if the company is successful, the person may get a reward as a gesture of belief in you.
Crowdfunding for Startups
Another option for the early stages of a project is crowdfunding, which has become very popular in recent years. It basically consists of collecting money through specialized platforms, which evaluate the project and allow it to be published on them. There are different types of crowdfunding:
- Reward crowdfunding: selling the product or service before it's developed.
- Crowdlending: economic loan to small investors.
- Equity crowdfunding: sale of shares of your startup.
Nearly 50 years ago the Spanish government created the Instituto de Crédito Oficial, ICO, to help self-employed people, companies, or organizations to expand and even to internationalize their businesses.
Basically, ICO lines are government loans executed through banks and authorized financing entities. The banks are responsible for the money that the state lends.
Subsidies for newly created companies
Subsidies are aid from government bodies to newly created companies that cover needs in certain areas. In the case of Spain, subsidies for entrepreneurs are announced annually and are classified by sector of activity.
It is therefore important to spend time researching the subsidies, knowing the requirements for applying, and seeing which of these is best suited to the project you are or want to develop.
Business angels are people who can invest in the initial phases of projects and even in stages where the startup is more consolidated, if they believe that the business could have the scope to develop financially. In most cases, the investments they make are in exchange for shares/participation in the startup.
If you want to know more about what a business angel can do for a startup, we recommend reading our article: What is a "Business Angel" and how can it help you?
Incubators provide investment, time, and resources to help businesses grow. Something important to note about incubators is that while it is true that they may invest in a project, they are more focused on providing other types of resources, mentoring, contacts, etc.
At Bcombinator, we help startups grow with our founder, Erik Brieva, who has created around 16 successful companies. As an informative fact, he has launched a series of sessions in which he will share the keys to grow your business in our facilities.
Accelerators are programs that help startups take the next step in their growth. They do this by establishing contact between the startup and investors or by investing directly in the startup in exchange for participation in the company.
If these means of financing are taken into account and a good business plan is developed, which demonstrates that differential value for investing in the project, the probabilities of obtaining capital will be much higher, at any stage of the business.