The startup funding stage is where you get outside capital to help your business grow. It can include angel investors, seed funds, venture capitalists (VCs), and even mezzanine financing providers. But before you can attract any outside investment, your startup must have a clear path to liquidity and strong financials that prove it’s ready for growth.
Getting startup funding can take a lot of work. Whether you’re seeking a small business loan from your local bank or pitching VCs to invest, it’s critical to be prepared. That means researching the various types of funding and their requirements. And preparing a well-written application that clearly articulates your business idea and its potential impact.
The type of startup funding you choose will affect ownership and how much risk your business takes on. For example, using a credit card might be a smart move, but it’s important to keep your balance under control or you could face high interest rates or hefty fees. The same goes for tapping into your home equity — it’s important to have a plan and know how much you can afford to lose if things don’t go according to plan.
Investors are the holy grail of startup funding. They have the deep pockets, expertise, and connections to propel your business to the next level. But they’re not just giving you money; they want to be part of the journey, so they can offer mentorship and guidance along the way. And they’ll expect to see a streamlined financial operation with clear, real-time information.