You must have heard people saying, ‘you have to spend money to make money.’ Whether you are looking to buy stock or get your website up, you need some investment to get your business running. There are, of course, many types of businesses that don’t require funding in the traditional sense.

You may still require external investment to support the business operations before the money starts. However, fund raising for startups is one of the most nerve-wracking events. Sometimes, waiting for the funds becomes so excruciating and tedious that founders give a second thought to their business idea.

That does not mean you cannot obtain funds for your startup if you are a lone founder. Of course, you can get it with careful planning. So no need to fret! This article will provide some imperative information about fund raising for non profits and startups. Continue reading!

The first step of fundraising

One of the common issues most lone founders face is underestimating how much funding they require. A good idea for estimating and obtaining the funds you need is determining exactly how your money will be spent. This is where your business plan or investment proposal with come into play.

While doing so, don’t forget it is equally crucial for you not to overestimate your fund’s requirements; make sure your target amount is an achievable goal. However, without experience, writing an entire business plan may seem like an impossible task.

You can take experts’ help and scour the internet to find a step-by-step guide to writing business plans for a new business. Ultimately, though, there are just two things you need to keep in mind.

Firstly, you need to figure out what you need for everything from advertising to stock, equipment, and staff. It is advisable to draw up an estimated cost for every aspect of your business.

Secondly, you must be able to justify why you need each of the things mentioned in the first step. Doing this offers two main benefits: first, you can convince your potential investor this way, and second, it is an excellent way of cost-cutting and eliminating unnecessary expenses.

Next, you must know what kind of investment prospect you are before you hunt for funds. Would you bet your savings on the success of your company? Or would you refer to it as a high-risk investment? Remember, nobody will be interested in investing in your business if you are not confident about it. So make sure you are well-prepared before you meet an investor.

Traditional sources of startup funding

Once you have a clear idea of the funding you will require, it is time to start looking for investors. Here are a few more realistic traditional routes toward obtaining funds.

Banks

Banks are undoubtedly one of the most prominent places to turn for investment in your startup. A traditional bank loan usually offers reasonable interest rates and doesn’t require you to give away part of your business.

However, most bank loans will not be able to match the large-scale investments offered by venture capitalists and private investors- after all, banks are obliged to help as many people as possible more efficiently. 

Private investors and Venture capitalists

Private investors and venture capitalists are individuals or organizations willing to invest some of their money for a profit. However, you will be asked to part with some equity financing in your business in return for investment.

For example, if your business is valued at $250,000, an investment of $50,000 would typically give the investor 20% of your business. In practice, this means 20% of the control and, most importantly, 20% of all profits.

Hopefully, you have understood that fundraising for startups is not as daunting as it seems. Online is great for looking for private investors and venture capitalists. A quick google search reveals hundreds of companies willing to hear your investment proposal, or you can approach your bank anytime for the required investment.