How to Get Money to Launch Your Project

As a startup, your business faces many challenges in its early stages, but none is as important as finding money to get everything off the ground. From office rent to buying equipment and hiring people, everything you need to turn your idea into a real business requires money: the fuel that makes it all happen.

Unless you are already wealthy and independent or have family ready to invest in your project, you will probably have to work hard to secure that funding.

Fortunately, there are many ways today to raise funds to start a company, and contrary to what many people think, banks are not an option we recommend. Having a clear fundraising strategy matters more than simply going for the most obvious choice everyone assumes.

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1- Crowdfunding

Crowdfunding is an online process. Several platforms such as Indiegogo, Kickstarter, and others let people create a project, upload photos, videos, a work plan, and rewards for those who contribute money. You set the minimum amount required to get started and wait one or two months for people to send funds so you can launch. It is not an easy method, but it has several advantages. On most platforms you do not have to give away any equity in your company; it is essentially gifted money. That is why you need to move quickly once the funds are collected, because you must deliver the rewards people are expecting in return for their support.

2- Personal financing

Starting your own business is risky, and in many cases that level of risk is exactly what stops traditional lenders from giving loans to entrepreneurs. It becomes even harder if the startup founder has not invested any of their own money. It is very difficult for a third party to give you money for your idea or business if you have not put any of your own capital at risk.

If you have savings or own your home and are willing to refinance or take out a second mortgage, these are options you should definitely explore if you are comfortable with the possible consequences. Remember the rule: it is not about how much you could potentially make; it is about how much you can afford to lose.

3- Loans from friends and family

Your friends and family have a strong personal interest in seeing you succeed. That can make them more willing to invest in your business, especially at the beginning. However, taking money from friends and family can get complicated, and every pro and con must be carefully weighed before you decide to use this route. As the saying goes: when you borrow money from a friend, you risk losing both the money and the person.

4- Pre-selling products

If your business is built around selling a single product, the easiest way to raise money to produce it may be pre-selling. By pre-selling your products you can avoid making too many units and ending up with a warehouse full of unsold inventory. It also confirms that real customers trust you enough to move forward.

This level of pressure can feel intense for some entrepreneurs, so take time to consider the implications of raising money before you deliver a product. You will need a solid timeline for manufacturing and delivery and you must stick to it; otherwise customers may demand refunds, which can create a range of problems.

5- Contests

Believe it or not, some organizations offer cash prizes or even funding to companies and entrepreneurs who enter their contests. Eligibility requirements, entry fees, and judging criteria vary widely. But if you are confident in your idea and your pitch, this could be a way to secure some capital.

6- Angel Investors

Angel investors stand out from other funding options because they are actively looking for businesses or ideas to invest in. Many of today’s largest tech companies, including Google and Yahoo, were funded by angel investors. In the most basic deal, taking money from an angel almost always means giving the investor a share of equity in your company. They are especially recommended for tech businesses.

7- Venture Capitalists (VCs)

Like angel investors, venture capitalists have capital to deploy and want to put it into young, promising companies with high growth and profit potential. VCs also typically seek equity in exchange for their investment, but they often want a say in the direction of the company as well. VCs are looking to make money on their investments, and many believe the best way to do that is to have some control over how the company is run.

There are many other ways to finance a business still in the idea stage. This list has been tested by Damien Soitout and his clients and has worked in every case. It is important to understand that if you are launching a project that requires raising funds, people will not focus only on the product or service. Your pitch must show your character as a person and as a project leader, real and realistic numbers, and a plan that makes sense. Every new entrepreneur thinks they have found the best idea in the world, when in reality they are painting a picture in their mind without staying objective. You will not raise funds if your project does not make complete sense from the very beginning.