Launching a new business can leave you with numerous feelings ranging from excitement to trepidation and overwhelm. One of the most stressful aspects of launching a new start-up is finding investors and some start-up capital. Start-up business owners often think they must fund the launch of their new business themselves, but other options are available depending on your circumstances. This RJF Accounting guide will explore the top 5 ways start-ups can raise capital to launch their new business so you can get the investment you need to get your new small business off the ground!
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showFriends & Family
The first option that most startup entrepreneurs should probably consider is speaking to family and friends; after all, these people already know you and could be more willing to take a risk than a traditional lender.
Funding it this way has added benefits, such as free word-of-mouth marketing. Family and friends are more likely to offer constructive feedback on your business idea or may even be willing to help you in practical ways when launching the business.
Friends and family are also less likely to ask for collateral or assets for security, meaning more business profits can be used to grow the business and pay them back sooner.
Angel Investors
Have you ever seen an episode of Dragons Den? Well, the Dragons are all angel investors and seeking an angel investor for your startup could be the way to go! Angel investors are usually successful business owners looking for investment opportunities or to give back to the business community. They often can bring much more to the business than just investment, with some of them parting some of their knowledge to help you grow your startup.
If you cannot see yourself going on TV to pitch to the Dragons, don’t worry; angel investors can be found without the need for lights, camera action! Websites such as UKBAA are a good place to start.
Bank Loan
Depending on your level of investment needed and if you meet the lending criteria, a bank loan could be used to fund your startup. To be considered for a bank loan, you will need a well-thought-out and well-written business plan and a good credit record, and some banks might ask for an asset to be secured against the loan. Bank loans are not always the best option for your startup funding; they can be hard to secure and have interest and repayment plans that can hinder the initial growth of the business, so taking one should always be thought about and planned out.
Government Funding
There are government funding schemes that are accessible to certain start-ups; we say some as the schemes tend to be targeted at specific industries and demographics. Government funding is not always on a national basis either, regional schemes from local authorities can be an option too, so it is worth checking with your local council authority or chamber of commerce to see if schemes are available.
The government funding schemes can range from loans to grants, so it is worth looking into, as you might be eligible for a grant which will help you with one or more aspects of launching your startup without ht need to factor repayments into your budget.
Crowdfunding
Crowdfunding is becoming an ever-popular way to fund new startups or product ideas, with the rise in sites such as Kickstarter, Seedrs and Crowdcube. Crowdfunding has benefits but can also come with a large percentage of fees involved depending on the platform. However, the upside is that it can be less complex to crowdfund than secure a loan from a traditional lender and quicker than seeking an angel investor.
There have been many startups that have crowdfunded their new business idea and made them a huge success, to name a few:
With big names like these turning to crowdfunding, it should never be discounted as a reliable means of investment to get your startup launched!
How Can RJF Accounting Help?
RJF Accounting are not just a team of number crunchers that prepare tax returns; we can also help raise investment and investor relations! We can help with everything from creating pitch decks to preparing investment reports to help your start-up raise investment it needs to get going!
Speak to the team today about our services. You can call the team on 0161 5040629 or email us at hello@rjf.uk.com to see if we can help you get your plans off the ground! We are open Monday to Friday, 9 am – 5 pm!