Listed in no particular order, here are some of the most common ways to get funding for whatever business venture you want to get off the ground. Some are naturally much better than others, but it all depends on what kind of business venture you want to get into and where you are in terms of the capital you have, the sweat capital you’ve already put in and in consideration of any other investors who might have already pumped some money into the venture.
Angel investors are great sources of funding because when they invest their capital into your venture, not only does it mean they believe in it enough to risk their capital, but they also avail themselves to help you with the day-to-day operations and development of the venture. It’s not easy to get funding from an angel investor though.
VC firms are more formalised versions of angel investors in that they are professionalised, official corporate structures that are in the business of funding ventures for profit. Often it is the case that a former businessman or sole investor will gather a team of fellow investors, financial experts, and accountants to form a firm similar to Anfa. This eliminates a lot of risk for them while also creating a larger pool of capital to invest in companies. Venture capital can be great if the exit strategy you’ve earmarked for your venture is that of something like going public and listing on the Stock Exchange. VC money is also not easy to get, although Silicon Valley might suggest otherwise.
If you can get your venture crowd-funded then that’s exactly how you should go about raising money to get it off the ground. Typical crowd-funding platforms don’t allow for equity to be exchanged for the pledges contributed by what are subsequently donors. So that means you don’t need to pay anybody back, but this is tricky because donors naturally want some kind of value to be returned to them for their pledges.
R&D Government Funding
Research and Development funding from the government is another great way to raise the capital needed to get a venture off the ground, simply because you would effectively be receiving taxpayers’ money to develop your idea. The trick is to go into a venture which seeks to develop something which the government can either buy from you and deploy for the masses, or something which will subsequently help the masses.
R&D Private Funding
Private Research and Development funding works in much of the same way as government R&D funding, except here you’d be dealing with a private entity as opposed to a government. The same applies with regards to the types of projects, except the private company naturally wants to gain some kind of profit out of funding the ventures they choose to fund, instead of doing it purely for the benefit of the public.
Private lenders offer flexible funding that traditional financing entities may not provide. Take, for example, short-term rental loans (commonly known as STR Loans), a type of private lending that can be very useful in the hospitality sector. Private loans allow entrepreneurs to secure funds quickly, enabling them to make quick renovations for short-term rentals. The accessibility of peer-to-peer lenders and their tailor-made funding options make them a viable option for ventures and businesses seeking timely financial support for growth and expansion.
If you can work to build up the capital you need to get your venture off the ground, bootstrapping in this way is definitely one of the better ways to do so, except it’ll likely take a bit of a while.
UK business loans (or the likes) are generally granted to ventures which have a solid business plan. Businesses must also demonstrate their capability to repay the loan and show evidence of their financial stability. The lending institution will assess the risk associated with the business before approving the loan. So if it’s something new you’re working on then it’s very unlikely that an institution such as a bank will grant you a business loan to get it off the ground. Sure, there are online lenders that can be approached in such a case.
On the other hand, if it’s a traditional venture like property development, then you might be able to secure a loan with the right help. Experts in funds arrangement similar to Lincoln Frost could give you access to the right people and guide you through the application process in order to secure a loan. Similarly, for other ventures, with the right help, loans could be arranged.
Before We Part
Ultimately, the best option for funding a venture depends on the type of venture, the resources available to the entrepreneur, and their willingness to take risks. With the right help, entrepreneurs can find the funding they need to get their ventures off the ground and start generating returns. With a wide range of options available, entrepreneurs can find the right fit for their venture and make the most of the available resources.