Funding your launch: 5 sources of finance for your startup

Some startups sink because they run out of money before they can become profitable. Your business will need money for everything from product development and hiring key staff to marketing, new equipment, office space, and managing day-to-day expenses. As well as managing cash flow proactively, it helps to secure funding.

So where can you find the funding your startup needs to stay afloat? Here are the 5 most reliable ways to secure capital.

1. Bootstrapping 

Bootstrapping means funding your start-up using your own savings, money from friends or family, or early revenue.

Pros: You retain 100% equity and complete control over your business. 

Being on the hook financially forces you to be lean, keep costs tight, and focus ruthlessly on profitability from day one.

Bootstrapping proves to future investors that you’re resourceful and that your business model is commercially viable, and won’t stay dependent on their cash.

Cons: Growth can be slow if you’re feeding in money gradually, and of course you’re personally taking on all the financial risk.

2. Startup Loans 

This is Government-backed debt financing. You’ll get free support and guidance to help write your business plan, and successful applicants get up to 12 months of free mentoring.

Pros: These schemes are designed specifically for new businesses (often under two years old) and offer favourable interest rates. They are debt, meaning you keep your equity whole.

Cons: You have to repay the money with interest, and you have to meet certain criteria to be eligible.

3. Crowdfunding 

Crowdfunding is where you raise funds directly from the public via online platforms. 

It can be rewards-based, where you offer backers perks or the product itself. This is great for product-based startups.

Or it can be equity-based, where you give up small shares to many investors. This is better for service-based startups where you haven’t got a physical product to share, including those based on AI / tech / SaaS. Instead of giving them a discount on your product, you’re offering them a share of future profits.

Pros: You build a massive community of brand advocates before you’ve even fully launched. As well as a way to finance your startup, it’s also a  massive market validation exercise.

Cons: Crowdfunding is a popularity contest. You need a compelling pitch to convince hundreds of people to get on board.

4. Angel Investors

These are your high-powered business champions. Wealthy individuals who invest their own money in early-stage businesses in exchange for a share of profits.

Pros: Angels bring more than just cash; they offer invaluable mentorship, industry contacts, and experience. They’ve been there and done it; they know what it takes to succeed.

Cons: Angels are experienced business people, so they’ll drive a hard bargain. You’ll have to give up a meaningful stake in your company, and they might want control over key decisions.

To win over hardened investors, you’ll need a really professional pitch. They need to see a big brand in the making.

5. Grants and Accelerators

These are great sources of funding, because they often provide capital or resources without taking a slice of your business.

Grants: Funding from government bodies or local initiatives for specific purposes like innovation or research. You don’t have to pay them back.

Accelerators: Structured programs like the Nat West Accelerator in Bristol that offer resources, mentorship, office space, and sometimes a small initial investment in exchange for a small amount of equity.

Pros: You retain 100% equity, and being accepted into a prestigious program is a huge boost to your credibility.

Cons: Both grants and accelerators are extremely competitive. You have to submit an application that clearly communicates your purpose, strategy, and potential impact.

Launch Ready

The best funding plan might be any one of these methods, or a mix of them, depending on where you are in your growth journey. You might want to stagger your growth, starting small before moving on to the next stage of funding.

When it comes to investors, lenders, and backers, they all want to invest in confidence and clarity. They back the brands that look like they’ve already made it.

Get in touch and let’s have a chat about making your brand look good in front of investors, so your business is ready to take the next tide.