Funding your business should be at the top of your list of objectives if you want to build your own profitable digital firm.
If you’re aspiring to launch a successful tech startup, securing the necessary funding should be a top priority. The tech startup landscape is highly competitive, making it essential to explore sensible and realistic funding options that can put your venture on a solid financial footing right from the beginning. In this guide, we will explore the most intelligent and practical ways to fund your tech startup in 2020.
- Angel Investors
Angel investors represent a popular funding route for tech startup founders seeking seed capital. These individuals or private entities are willing to invest in promising startups in exchange for equity ownership. While typical investments range from $25,000 to $100,000, high-profile angel investors may contribute millions. Ensure you have a well-prepared pitch deck and a growth plan when approaching an angel investor.
Bootstrapping
Bootstrapping is a common practice in the tech startup community where founders finance their ventures using their personal funds. This can involve using personal savings or tapping into personal lines of credit offered by banks. One popular form of bootstrapping is remortgaging, which entails releasing capital by refinancing a home. User-friendly platforms like Trussle offer free remortgaging comparison services, making this funding option more accessible.
Crowdfunding
Crowdfunding is a dynamic and vast industry, generating $300 billion annually to finance tech startups globally. It encompasses various forms, including rewards-based and equity-based crowdfunding.
Rewards-based crowdfunding, available on platforms like Kickstarter, offers donors rewards such as free products or services in exchange for financial contributions.
Equity-based crowdfunding provides donors with partial ownership in your tech startup.
- Startup Accelerators
Startup accelerators, once a niche concept, are now widespread in cities with vibrant startup communities. These development centers primarily focus on tech businesses and provide financing, mentorship, and resources to startups with high potential. Any founder can apply for a startup accelerator, and successfully joining one can offer substantial rewards with relatively low risk.
- Government-Backed Financing
Governments worldwide have initiatives to promote startup growth, driven by the potential for job creation and tax revenue. Different countries offer various forms of support.
In the US, tech startup founders can access low-interest loans and free grants from the Small
- Business Administration.
In the UK, founders can apply for a Start-Up Loan, which includes low-interest loans ranging from £500 to £25,000, along with 12 months of free mentoring.
These are the most straightforward and low-risk approaches to fund your tech startup in 2020. Whichever funding route you select, always ensure that you have a comprehensive business plan in place before applying.
