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Four ways to source business funds

If you’ve got a million dollar idea and empty pockets, don’t fret. Raising money is difficult (in fact, it’s the reason why most start-ups never get off the ground) but it’s by no means impossible.

While less than 1% of start-ups receive support from angel investors, and even fewer from venture capitalists, there are plenty of ways you can generate your funds.

You need money to make money.

At least, according to a friend of mine. While some people do launch incredible businesses with only what they already have, many more need investments in order to upskill, pay staff, and access resources and technology.

For a lot of them their first thought is family. But chances are your family and friends won’t have the kind of money you’re looking for: and asking them to bet their wealth on your idea can be daunting. Giving them percentages of your company can also bring you trouble down the line; leaving you with a loss of control and damaged relationships.

Thankfully, there are plenty of other legitimate ways to get free money. Here are four ways you can access seed money without needing to lean on the people in your life:

Crowdfunding.

Kickstarter has seen over $4.3 billion in pledges. If you’re looking for money to develop a product, crowdfunding through services such as Kickstarter and GoFundMe can help get you moving. The biggest benefit of these platforms is that you don’t need to give equity to your supporters, they double as marketing, and they help you reach potential customers before you even launch.

They do take a cut of the profits (they are businesses as well, after all) but if you’re looking to earn money online crowdfunding is a recognized, trusted method. Make sure you offer reasonable incentives (I knew a man once who was offering a free $15 t-shirt with each $25 donation, which seriously cut down the money he walked away with).

Different platforms have different functions: some prioritize start-ups especially, and others will accept any project. Before deciding on a platform, research which percentages they’re taking, where they’re based, and which other products they currently have listed.

Accelerators.

If you already have a business idea, you can apply for an accelerator. While they do tend to be pretty competitive, they’ll provide you with mentoring in a strict time frame designed to get you running.

While you might think that accelerators only accept you if you give them equity, that’s not actually true. There are many programs that offer the same intensive coaching and resources that equity-play accelerators do, but minus the whole equity part. Some of them provide massive cash prizes and incentives: and you don’t always need to provide them with equity to take part.

With the popularity of accelerators on the rise, you might be able to find one nearby.

Universities.

If you studied at university, it might be time to head back to campus. Many offer grants and awards for those who have graduated or are currently studying in their halls, and some even open their services to their faculty. If you’ve got a connection, it could be your golden ticket.

Some offer pitching competitions with cash prizes, others enable people to join accelerator programs, and others still offer full-fledged support. If you’re looking for co-working spaces, grants, mentorship and more, checking in with your alma mater may save you a major headache.

Government grants.

You can find money to fund your start-up on a number of different governmental and city levels: and they won’t ask for equity. Depending on where you live and what kind of industry the government is currently supporting, you might be eligible for a grant.

For governments with funds to spare investing in startups and entrepreneurship can reap great rewards, creating jobs and attractive talent to their regions.

Whichever industry your business falls into, there’s likely a grant which could provide you with the seed money you need. While you might have to meet strict stipulations (such as extensive paperwork) you’ll never need to pay back the money or give up equity.

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While finding funds can be daunting, a lack of money is no good reason to give up on an otherwise great idea. These tools could be the things that help you start soaring: so what are you waiting for?

- Lena Klein

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