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Start-Ups

Finding Startup Funding: Where Should Entrepreneurs Start

By Garrett Spence   |    November 7, 2014   |    9:20 AM

How to Find Enough Startup Capital to Successfully Launch a Business

Launching a business requires cash – and oftentimes lots of it. This can be a daunting obstacle for many entrepreneurs. In the past, obtaining funding usually meant hitting the pavement and talking to as many people as possible. While this is still true in a lot of respects, there are now new and possibly better ways to obtain startup funding.

How to Secure Startup Funding

  • Start at home: Family and friends are great initial funders. Ask them to make an investment in the company and offer long-term rewards for “early investors”. Just be aware that if the company doesn’t take off that the entrepreneur may have to deal with disappointment from those closest to them. Another avenue is to cash out the savings. While this can be scary at first, entrepreneurs need to understand that they’re investing in their future.
  • Create a network: Make it a point to meet as many people as possible. Go to conferences, networking events and the like. The larger the network is, the more likely the entrepreneur will eventually meet people that can help him in the future.
  • Offer pre-ordering: Pre-ordering does two things: It builds a list of ready-to-buy customers, and it also shows investors that the company has a customer-base – making it a less-risky investment. Entice the public to pre-order the product while the kinks are worked out and testing is still being done.
  • Try crowdfunding: Crowdfunding is extremely popular these days. Sites like Kickstarter make it easy to find potential investors. And these investors don’t have to put up much capital. That’s the beauty of crowdfunding: Businesses can get all the capital that they need to get started from a large number of potential investors. The one problem with crowdfunding, however, is that it’s popular. Businesses need to come up with a good story and market their idea to get people interested.
  • Look for grants: Microloans and grants are excellent ways to find startup capital. The Small Business Administration offers both loans and grants to small businesses, and there are additional types of grants out there as well. Entrepreneurs will have to do their homework to find these grants and be willing to spend dime writing up the proposal. Also, read the specifics of the grant requirements and what the money can be used for to ensure that it’s the type of capital that the business needs.
  • Try an accelerator program: Startup accelerator programs are highly popular these days. These programs usually provide some capital to startups along with business mentorship. Getting into an accelerator program can be extremely competitive, so entrepreneurs should be prepared to apply to several of them.
  • Locate an angel investor: Angel investors are always looking for new ideas in which to invest. If the idea is good enough, they’ll provide a large chuck of cash to help the entrepreneur get started. Angel investors, however, will want something in return for their investment, usually equity in the company.

Starting a business can be intimidating and expensive. Yet, funding obstacles can be overcome if entrepreneurs are committed to the business and willing to do some legwork.