Startup Funding: Different Funding Options And How To Secure Them
By Bond Collective Staff
Many entrepreneurs think securing startup funding only involves angel investors or venture capital. And while it’s true that those options do play a big role in raising money for your business, they’re not the only choice for startup funding.
When you’re first transforming your idea into a viable plan, your business isn’t ready for investors yet. But that doesn’t mean you don’t need capital to continue. What it does mean is that you have to get creative with your fundraising efforts.
In this article, we’ve put together 10 unique startup funding options that you can pursue right from day one. These capital alternatives can help sustain your business until it’s hardy enough to present to investors of all kinds.
Think of these as the most basic startup funding solutions that you can (and should) implement while your business is still young.
Startup Funding Options And How To Secure Them
1) Cut Costs
This is one of the most basic ways to raise startup funding. Every dollar you don’t spend on things like overhead or an expensive lease is money that you can use to build your product or service.
In fact, the perfect time to reduce costs is when you’re first starting out. If you can cut your expenses to the bone (at least for a while) by foregoing the latest technology or basing your operations in a coworking space, the savings will add up quickly.
And maybe you’ll find you don’t need those expensive computers and that your work is just as good in a temporary office as it is anywhere else.
If you’re low on cash and need something to keep your startup moving, consider bartering with other businesses our entrepreneurs. While it’s not technically “startup funding” per se, it is a way to get things for your business without losing cash.
Bartering can take many shapes and forms, so don’t feel restricted if you don’t have a tangible product to offer. Trade a bit of free coding or design work for the used laptop or tablet you need to make your work life easier.
3) Earn Startup Funding By Consulting And Advising
Think of this startup funding option as a side hustle that makes your dream of running your own business a reality. If you’ve got skills or knowledge in a particular area, consider consulting or advising for other businesses.
You can then turn around and use the money you make in that endeavor to take your startup to the next stage. It might not be all the funds you’ve ever wanted, but used in conjunction with the other suggestions on this list, it can quickly add up.
4) Work With A Co-Founder
If you’ve been going it alone, consider working with a co-founder.
Not only is it good to round out your business’s skill set, but a co-founder can also open doors to other avenues of startup funding. They may even have their own personal assets that they’d be willing to liquidate to keep your startup running.
5) Don’t Quit Your Day Job
No entrepreneur wants to hear these words when the energy in your startup is high and you’re making great strides towards viability. But if your current job provides a comfortable living, you might consider keeping that 9-to-5 and using the extra money you make as startup funding.
This makes it easier to stay true to your original vision without compromising or bowing to outside opinions.
But if you do go this route, plan for a time when you can turn in your resignation. Then you can devote all your energy toward transforming your startup into a full-fledged and successful business.
6) Offer Franchise Rights
If your product is almost ready for market but you need a little more cash, raise those funds by offering franchise rights.
Think of these rights as an exclusive agreement to sell your product for a specific amount of time. Even just 100 licenses at $5,000 a piece can generate considerable startup funding to get your business across the finish line.
When setting the terms for these franchise rights, keep the time period of exclusivity low (e.g., one year). Once your product is ready, you want to be able to expand into as many markets as possible. But that first year of exclusive distribution can provide insight into the growth potential of your product.
7) Apply For Startup Funding For Women And Minorities
If you’re a female- or minority-owned startup, you can tap into almost a billion (yes, billion) dollar’s worth of working capital, equity, investments, and bonding by applying for help from organizations like the United States Department of Commerce’s Minority Business Development Agency (MBDA).
8) Participate In Big-Brand Programs
Not many entrepreneurs know about this option, but it can provide thousands of dollars of startup funding. Notable big-brand programs include Huggies, Pepsi, and Uber. Not all of these provide money as an incentive, but nearly all award guidance or exposure, which can be just as good as cash.
Huggies, for example, asked entrepreneurs to come up with an innovative product to help make life easier for parents. The prize was $15,000 and advice on how to make their product into a viable business.
Uber, on the other hand, partnered with Google Ventures to sponsor a contest where startup owners got to pitch their business plan to venture capital investors while riding in a luxury vehicle.
9) Tap Your Local University
Many universities across the country have programs that offer startup funding to local businesses. It helps if you’re a student or alumni. But even if you’re not, it doesn’t hurt to investigate.
10) Set Up A Pay-To-Work Program
If you’re at the stage where you need to hire employees, you can save your working capital (an indirect form of startup funding) by implementing a pay-to-work program.
Ask potential employees to make a donation in return for a job in your startup. If they opt in, they’re considered founding members (kind of like micro-investors). If they’re fully committed to your startup and work through the highs and lows, they’ll also receive management opportunities sooner rather than later.
Preserve Your Startup Funding By Working Lean
Your startup may have been born in your garage or at your kitchen table, but it can’t stay there forever.
When you do secure startup funding, you’re going to need to hire a team to make your idea a reality. And they’re not going to want to work in your tiny apartment or your friend’s barn. They’ll need a proper, professional office space.
But before you run out and spend your hard-earned startup funding on an expensive lease, consider preserving that capital by working lean instead. That doesn’t mean setting up your operation in a run-down warehouse with no heat. It means finding ways to minimize overhead expenses while maximizing output.
One surefire way to preserve startup funding and work lean is to set up your operation in a coworking space like those offered by Bond Collective. And when you work at Bond Collective, you won’t have to skimp on the decor and amenities.
All of our six locations are professionally designed and decorated to convey an upscale, executive image that can benefit your startup from day one. Bond Collective also allows you to choose from a variety of workspace options, including:
When you partner with Bond Collective, you don’t just get a beautiful space that fits all your needs. Each and every temporary office space options also comes with exclusive amenities you can’t find anywhere else.
Whether you rent by the hour, the month, or the year, you’ll get:
Access to small and large conference rooms
Daily on-site cleaning
Rooftop lounge area
Photo & studio (at Gowanus location)
Complimentary fresh fruit
Complimentary beer, coffee, and tea
Private meeting & phone booths
Guest reception and greeting
So keep that startup funding where it belongs — in your wallet — by basing your operations in a beautiful and well-appointed coworking space at Bond Collective.
To learn more about how coworking space benefits startups, small businesses, remote workers, and companies of all sizes, visit BondCollective.com today.