What are the different ways to fund your company for growth? The idea of running a business and being an entrepreneur has been the viral topic of 2021.
Probably at least since the pandemic began. According to the Washington Post, around 10 million people quit their jobs this year to pursue their dream careers.
Around 42% of the American workforce are on their path to being freelancers or business owners.
The idea seems promising, but many people fail when it comes to implementing and bringing their business projects to life.
Starting a company from scratch is challenging. Growing it and seeing satisfying progress can be even more of a real struggle.
We all love successful business stories, but we don’t really know the hard journey new companies take to scale and reach the top.
The Ultimate Guide To Pitch Decks
Some of the factors why companies fail are:
- Poor or lack of management
- Lack of capital or funding
- Entering a market that is too saturated
- Not having a marketing strategy
- Not adapting to the market demands or listening to their customers
- Sticking to an outdated business strategy/model
Instead of focusing on failure, have you ever asked yourself, what is the key to growing your company?
What is the right strategy to fund your business, keep you consistent, and meet the needs of the market?
The more you research, the better the chance you’ll find useful resources.
Reading motivational books written by successful business owners, having the right contacts, observing and studying your competition.
These are good starts to keep you on target and moving forward.
Once you have a clear idea of what your business is going to be, now it is time to put it into practice.
Funding is one of the biggest struggles for those who are just starting out in the entrepreneurship world. This very first step often leads them to give up, but there are many ways to do it.
Keep in mind that in fundraising, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Here is the content that we will cover in this post. Let’s get started.
1. Having The Right Contacts
An informal loan such as funding from family and friends can dramatically help you raise funds in the early stages.
Build a list of potential investors and filter it to ensure that you are working with individuals that support and believe in your project.
Define a contract to avoid future conflicts which may put your company at risk. If you are uncertain and lack experience or knowledge, working with a lawyer is highly recommended.
What are some of the benefits of relying on someone that you know?
- They can be flexible. Friends and family often offer loans without security or accept less security than other funding sources such as banks.
- Friends and family often lend funds at a low rate or without interest.
- You could expect a longer repayment period by seeking funding from friends and family. They may also look for a lower rate of return compared to banking alternatives.
- Your friends and family already know your circumstances, work ethic, passion, and character making them less likely to need a detailed business plan for your startup.
When receiving funding from friends and family, you might end up having a list of people in your circle telling you how to run your business, and they are often inexperienced.
Therefore, you want to set clear boundaries on their role and know their expectations before accepting funding to determine if it is the right choice for you.
If you can work it out, this is one of the most effective ways to fund your company for growth.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
2. Bank Loans
Asking a bank for a loan is somewhat old-fashioned since our society is progressing so rapidly, and the opportunities to fund a project are endless.
Seeing it from a different point of view, working with a bank may be safer than we might think. Banks are large entities.
The bank acts as an investor but doesn’t ask for a percentage of your profit. The worst-case scenario is if things do not go as you expected.
The bank may request you to pay the loan within a certain deadline. You may or may not have a personal guarantee beyond the assets of the business.
Getting a loan from a bank may appear easy, but here are some things to consider before asking:
- Do you want to take on debt versus equity?
- The waiting process might be long and tiring
- The best rates aren’t always available to new businesses
- You’ll deal with a lot of paperwork
- Be prepared to receive a “No” answer
Crowdfunding can be a great option. Not only to fund a new business or to scale your existing one but to connect with customers, build your brand and even impress other investors.
Before starting a crowdfunding campaign, be very specific about why you are asking for funds. Explain your plan, how you will use their investment, and what they can expect to see in return.
Funders may be regular consumers, people in your network, or professional investors, and even institutions.
This typically kicks off by uploading your campaign online on specific platforms. Crowdfunding can be easier since people are often asked to contribute a small amount of money. It’s one of the best ways to fund your company for growth.
Still, there is a lot more to this strategy than most expect. Get pro help with setting a funding goal, creating a marketing plan, and crafting text and videos.
4. Finding Angel Investors
You should first identify who your angel investors are to know who you are asking for funds. Typically, these types of investors have a net worth of more than one million dollars.
They are a great go-to for the earliest days of business growth. Before approaching angel investors, ensure that you have a strategy and plan.
They are often eager to hear your pitch, and this is an opportunity that you don’t want to miss.
Convincing them to invest in your business is about
- Prepare a captivating pitch
- Having a great pitch deck
- Sharing the vision
- Building trust and a personal connection
Would you like more practical information on how to raise startup capital for your business? Check out this video I have created with some added details you’re sure to find helpful.
5. Pitch Your Idea To Venture Capitalists
How can venture capitalists help? Venture capitalists invest their money while risking losses in exchange for the chance of much higher returns or exit opportunities.
Often through acquisitions or IPOs. To pick the right investor and get the funds, learning the ways to reach the ideal venture capitalist is vital. As is knowing how to present the opportunity.
What do venture capitalists want in return?
- 10x to 100x return potential
- Fast growth
- A committed team
- The strongest team
- A really big market
What are some of the benefits of working with or getting funds from venture capitalists?
- They are experienced professionals in the field and are able to provide plenty of advice
- They can inject large amounts of capital
- Venture capitalists can provide a wide range of additional resources and support
- Venture capitalists have a massive network of connections in the business
Such investors can help you put your business in the spotlight and attract your ideal clients.
They can also help you with growing your business faster (since their main benefit is your company’s success and scale).
Venture capitalists are able to bring a lot of broad and deep experience in scaling your growth. Seeing beyond the horizon you see can be invaluable.
These investors will typically help you continue to find additional investors to keep your company growing over time. They are certainly valuable ways to fund your company for growth.
While there are many advantages of landing VCs, you will certainly have a lot of work to do in connecting with them and nailing the presentation with a strong pitch deck.
6. Use Your Own Funds
The first place to get your early seed money is often in your own pocket. Startups aren’t usually profitable for the first year.
So don’t drain your bank account. Instead, set aside money for living, and use the rest on your new business.
Include credit cards, personal loans, and other income sources that you can utilize to carry you through the challenging first year.
While creating a strategy to expand your business, be sure you are weighing the pros and cons of having an investor or a business partner.
Or at least the best moment to bring in more outside funds. Using your own funds might be a good fit at the beginning.
Many successful business people have applied this bootstrapping strategy to their company. They never regretted it.
Investing in yourself is often the smartest move. With creativity and resourcefulness, you’ll be surprised at what you can achieve.
Using your own funds is risky, but having a business partner might also be risky since you have to give away part of your company.
Instead, using your own funds and keeping 100% of your shares means having complete control in decision making and management.
7. Potential Clients
The consumers who might be interested in investing are those that believe in your product as much as you do and the capital to back it up.
It doesn’t have to be a lot either. You can offer pay-in-advance subscriptions or pre-ordering and having consumers pay for your product or service before the launch.
These methods are especially effective when you have an excellent marketing strategy to create “hype” around your business.
You might even attract other investors when they see your popularity.
There are many side benefits of this as well. Including creating a passionate and loyal community that really wants you to succeed. They may even turn into your best advertisements.
This not only applies to individuals but corporate customers as well. In some cases, they have stepped up to fund the development of new products, have helped with bundling products, or providing other resources.
This may even be the precursor to a future merger or acquisition. Understand how to use the many ways to fund your company for growth.
8. Social Media
Everyone with an internet connection and access to different social media platforms can generate money.
Have you ever heard about the pre-launch or pre-sale strategy? Many young entrepreneurs have been using this method to sell their products without even launching them into the market yet.
The biggest number of new businesses was recorded in the mid-2020 due to the pandemic. People who quit their jobs or were fired due to the circumstances decided to take a step forward and set up an online business.
They started out by promoting it on social media platforms such as Instagram or TikTok. Guess what? Their audience grew extremely fast, and they could scale their company in just three months.
Some of them even expanded their offices and hired more staff.
This isn’t just for brand new startups either. It can be used by more mature startups, and by launching new products and services to spark new growth and revenues.
- Create a product and present it to your online audience
- Promote it on the most relevant trending social media platforms
- Be consistent posting every day (do it yourself or hire someone professional)
- Announce a pre-sale and ask them to join your newsletter or mailing list
- In about two or three weeks, start to post your success through case studies and testimonials
As you move through the funding rounds to gain that much-needed capital, it’s essential to determine what kind of investor you are looking for.
Do they meet your expectations and needs? Can you meet their expectations? Know their role within your company, and how their position will benefit you and your company.
You might end up with loved ones who have unrealistic expectations of their role in the organization or a venture capitalist on the other side of the country with no involvement.
Also, never underestimate your audience. Gaining funding from potential consumers is an effective way to attract investors.
Funding your company for growth might seem difficult, but it will work out if you utilize the proper strategy and refuse to quit.
Conduct research into the different ways to fund your company for growth. isolate the strategy that will work best for you.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.