Financing Without An Investor – What Options Do Founders Have?
It is only sometimes possible for founders to find investors for a business idea. However, starting a business is viable. Because there are many ways to raise capital independently of investors. There are many strategies, from bootstrapping to taking out a loan to investing and cryptocurrencies. Some founders take advantage of funding or present their ideas at startup competitions. Incubators and accelerators also help to realize your business idea. This article explains the various ways to raise funds for a business idea independently of investors.
There Are Different Strategies For Getting The Necessary Capital To Start A Business.
Financial Independence Thanks To Bootstrapping
Bootstrapping is the form of financing that gives founders the greatest possible flexibility. No borrowed capital is raised, but the company is founded entirely with equity. This is possible, for example, by saving part of the income over several months or even years that can later be used to start a business. That takes some time, but the financial planning is on solid ground from the start.
Bootstrapping has numerous advantages and disadvantages. One of the advantages is that founders are particularly motivated when they have invested their capital in the startup. They want to make optimal use of the available resources and prove to themselves and the world that their idea is good. In addition, the company remains wholly owned by the founders, so they are free to make all decisions. The disadvantage, however, is that the scarce resources create a certain pressure, and remarkable freedom can lead to wrong conclusions.
Take Out A Loan
One of the classic forms of financing is taking out a loan. Banks can support founders if they are convinced of their business idea. Therefore, when applying for a loan, it is essential to bring a professionally prepared financial plan with you and to be able to present your business idea convincingly. The choice of the bank also plays an important role. This should match your business idea. The wide range of online loans also makes it possible to apply for a loan from the comfort of your own home. It is essential to compare the conditions exactly and select the best offer.
To get a loan, it is essential to have a good credit rating. Founders should therefore find out about the data that is stored about them at the credit bureaus before applying for a loan. It is also essential to always pay existing bills on time. Otherwise, this will hurt your creditworthiness. In principle, however, getting a loan without a credit bureau is possible.
The state has an interest in young, up-and-coming companies. That is why there are many different state funding programs that founders can fall back on. Most funds are available on favourable terms, and in a few cases, there are grants that users do not have to repay.
Various financial startup aids are aimed explicitly at recipients of unemployment benefits. The subsidy should allow them to try their business ideas to find a way out of unemployment. When using such funding, it is crucial to meet existing deadlines. In addition, certain grants are only awarded under specific conditions. Founders should therefore check carefully whether they meet the requirements for funding.
Present Your Idea At Startup Competitions
There are a large number of startup competitions that want to support young aspiring founders in implementing their ideas. Some of the competitors are regional, and others are international. Some contests require a concrete startup concept. For others, so-called “idea sketches” are sufficient. If you want to participate in such competitions, you should carefully study the conditions of participation.
However, this approach is only a support and should always be one of the financing concepts for your idea. Many founders participate in such competitions, some of whom present equally innovative ideas. Often only details decide whether such a competition is won or not. When another company gets the funding, founders are left without funding if they have no other source to raise capital from.
Incubators And Accelerators
Incubators and accelerators are similar to investors but differ significantly from them in some respects. Although an incubator provides venture capital, it is above all the premises and office infrastructure that founders benefit from in cooperation. Occasionally they also receive professional advice, through which the development of their business idea proceeds professionally.
Accelerators often come from the university sector. The idea is to support scientifically developed concepts and thus make them economical and marketable. Accelerator program users have a mentor and benefit from venture capital. However, it should be noted that the financiers often receive shares in the startup for their support.
Bet On Cryptocurrencies
Cryptocurrencies are a modern way to generate capital. The best-known means of payment in the digital world is Bitcoin. For example, it is possible to provide your electricity and technology resources to mine bitcoins. With patience and a certain amount of capital, money can be generated continuously.
However, this form of capital acquisition takes time. Alternatively, it is possible to generate capital through targeted investments. Here, too, cryptocurrencies have performed well in recent years. However, it is essential to seek professional advice to create an investment plan that suits your personal goals and investment behaviour.
There are many ways to raise capital independently of investors and to finance your business idea. Some, such as taking out a loan, offer the greatest possible financial planning security, while others, such as participating in startup competitions, have a particular element of uncertainty. Founders remain particularly flexible thanks to bootstrapping, but using subsidies or cooperation with incubators and accelerators also promises to be successful. Finding the best individual financing options for your business idea and personal financial preferences is essential.