Looking to fund your startup? You don’t always have to go with the traditional approach of VCs or angel funding – check out these 4 alternative ways.
Whether you choose the self-funded or formal funding approach, having some form of financing for your startup is always necessary to get it off the ground. But you don’t have to go with the traditional approach of venture capitalists or angel funding. There is no model answer for the type of funding that you should opt for, as it’s often dependent on the type of business you have.
Here are some tips for getting funding for your startup.
1. Credit cards
This approach works best for new startups with a small number of people. If your business doesn’t have a substantial sum of expenses or a lot of income, you can put it down on your credit card since minimum payments tend to be lower. You can also think about transferring credit card balances to get a positive balance on one card for funding. Most importantly, always understand and evaluate the risk of falling into credit card debt before signing on the dotted line.
2.Friends and family
Unlike traditional investors, your friends and family are more likely to finance your start up with minimal interest rates. They’re also the source with the least amount of red tape! You can loan from them in the form of ‘bridge loans’ that can be converted to equity at a later stage.
It’s a concept that has been around for a long time – getting people to support your business idea through monetary support of equity. In Singapore, crowdfunding is still a relatively unexplored terrain, but many startup founders are starting to jump on the bandwagon, especially with success stories like Pirate3D. Besides the usual sites like Kickstarter and Indiegogo, you can also try Crowdonomic, Pozible and the recently launched Crowdtivate, supported by StarHub.
4.Get a grant
The government offers some grants for startups, such as the ACE Startups Grant. The Cartise Consulting team has put together a list of grants and schemes that you can look through, depending on the needs of your business.
Most experts agree that the best approach to take is having a little bit of everything – it doesn’t hurt to have a good mix of debt and equity. It’s also important that the startup scene in Asia is unique in its own way, and even approaching traditional forms of investment is different.