9 Ways To Finance Your Online Startup

Starting an online business has become extremely easy and affordable these days. With the internet being a big part of our lives, a lot of people (Danes included) are looking to start an online business as a way to make extra money or even quit their day job.

However, many people don't know where they can get the capital for their new online business venture. Guest author Bertram Winberg has put together a list of nine ways you can secure financing for your online startup today. Here is more info on Bertram Winberg.

You first need to determine the amount of money you want for your online business venture. Make sure you calculate this correctly as some underestimate how much they need and others overestimate what they need. Once you know how much you need, you can use any of these steps to financing your online business.

Self-Financing

The easiest way to finance your business is to start part-time and build it up to be your full-time job. This is relatively easy, especially if you already have a client base from past work or from your freelance projects.

The money you earn as a part-time business can be used to fund your new business full-time. You could also use the money to pay for equipment and other start-up costs, or as working capital, until you become profitable.

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Family/Friend Investments

If any relatives or friends are willing to support your idea, it should be easy enough to convince them to help you out with capital. Be very careful with this, as mixing relationships and money can be big trouble. Your business failing will be bad enough without having your friends and family hate you for losing their cash.

Crowdfunding

Crowdfunding is a way of financing your startup by using money from large groups of backers or "the crowd". After a successful crowdfunding campaign, you will have several hundred backers for your startup that may also become loyal customers in the future.

Venture Capital

When you're looking for large sums of money to fund your business, venture capitalist groups are probably your best bet.

These companies typically fund businesses that are trying to develop innovative products or processes. They don't actually do the work, but they provide the capital and management expertise you need for your startup to take off.

The biggest advantage of raising capital this way is that you have the help of a large and established company that can provide you with more than just startup capital. 

Angel Investors

An angel investment is a way to get funding from accredited investors, usually through private investments. You will first have to pitch your idea to them and then try convincing them that it's worth investing in. Since their investment is tied to your success, these investors will work to make sure that your business continues to grow.

Other Start-ups

If you have a product in mind that is related to another startup's product and the same area of business, consider approaching them for funding. If your idea or product is related to theirs, it can be possible for both parties to benefit by working together.

Banks

Getting a bank loan is one of the easiest ways to get funding for your online startup, but it's often hard to qualify without a proper business plan. Banks will also only lend money if you can show that you have enough capital for running costs and loans covering possible defaults.

If your startup is in the early stages and doesn't have much collateral for a loan, it may be wiser to seek other forms of funding.

Join Startup Contests

If you're having trouble raising funds for your business, try entering a startup contest. There are several different types of startup contests available that offer prize money ranging from $10,000 to millions of dollars.

Winning one such competition will expose you to a huge pool of potential investors, and it could be the leverage you need to start getting bigger investments from corporations.

Try Securing Loans from Microfinance Providers

Many microfinance providers offer small business loans to those who don't have collateral or credit history. They may be able to help you with startup capital if they believe your business has the potential to grow and generate profits in a few years' time.

Conclusion

You should pick one or two of the methods we listed based on the amount of finance you need to raise.