Explain any four ways to fund startups.

1.	Explain any four ways to fund startups.
Answer» 1. Boot strapping : Commonly known as self financing, it is considered as the first funding option because by stretching out your personal savings and resources, you are tied to your business. 2. Crowd funding : It is the pooling of resources by a group of people for a common goal. 3. Angel investment: Angel investors are individuals with surplus cash who have keen interest to invest in upcoming startups. They also offer mentoring or advice alongside capital. 4. Venture capital : There are professionally managed funds which are invested in companies that have huge potential. 1. Friends and Family Borrowing money from friends and family is a classic way to start a business. While it may be harder to convince investors or banks of the quality of your idea, your family and friends often believe in your dream. They may be more willing to help fund your company. If you do go to friends and family for loans, it’s a good idea to make sure that each of you gets sound legal advice, especially if you are taking the money as a loan. The downside? Borrowing money is a quick way to lose friends and sour family relationships. Be careful if you decide to proceed this way. 2. Small Business Loans Some banks specifically offer loans to small businesses, but banks historically are careful about giving money to small companies. It can be difficult to qualify. There are alternative lending companies, however, who may be better equipped to help you get your business off the ground. The downside? Some of those alternative lending companies are predatory. Make sure you know who you’re borrowing from before you sign on the dotted line. 3. Trade Equity or Services Looking to get some web design done? See if you can barter with your neighbor who does some freelancing on the side. Perhaps you’ll help him with some marketing advice down the road. In virtually every city, there are communities of fledgling business owners who can work together. The downside? Trading services or equity can be an awful way to make a living, and so not everyone is willing to do it. Don’t be offended if your Number One choice says no way. 4. Bootstrapping One of the most common ways to get a business up and running is through “bootstrapping.” Basically, you use your own funds to run your business. This money may come from personal savings, low or no interest credit cards, or mortgages and lines of credit on your home. Getting a free credit report card will help you assess where you financially stand. Knowing this will help you figure out the interest rate you will get on loans, which can give you access to affordable credit.

Answer»

1. Boot strapping : Commonly known as self financing, it is considered as the first funding option because by stretching out your personal savings and resources, you are tied to your business.

2. Crowd funding : It is the pooling of resources by a group of people for a common goal.

3. Angel investment: Angel investors are individuals with surplus cash who have keen interest to invest in upcoming startups. They also offer mentoring or advice alongside capital.

4. Venture capital : There are professionally managed funds which are invested in companies that have huge potential.

1. Friends and Family

Borrowing money from friends and family is a classic way to start a business. While it may be harder to convince investors or banks of the quality of your idea, your family and friends often believe in your dream.

They may be more willing to help fund your company. If you do go to friends and family for loans, it’s a good idea to make sure that each of you gets sound legal advice, especially if you are taking the money as a loan.

The downside? Borrowing money is a quick way to lose friends and sour family relationships. Be careful if you decide to proceed this way.

2. Small Business Loans

Some banks specifically offer loans to small businesses, but banks historically are careful about giving money to small companies. It can be difficult to qualify. There are alternative lending companies, however, who may be better equipped to help you get your business off the ground.

The downside? Some of those alternative lending companies are predatory. Make sure you know who you’re borrowing from before you sign on the dotted line.

3. Trade Equity or Services

Looking to get some web design done? See if you can barter with your neighbor who does some freelancing on the side. Perhaps you’ll help him with some marketing advice down the road. In virtually every city, there are communities of fledgling business owners who can work together.

The downside? Trading services or equity can be an awful way to make a living, and so not everyone is willing to do it. Don’t be offended if your Number One choice says no way.

4. Bootstrapping

One of the most common ways to get a business up and running is through “bootstrapping.” Basically, you use your own funds to run your business. This money may come from personal savings, low or no interest credit cards, or mortgages and lines of credit on your home. Getting a free credit report card will help you assess where you financially stand. Knowing this will help you figure out the interest rate you will get on loans, which can give you access to affordable credit.