• iReport team

5 Funding Ideas for your Startup

Capital funding is one of the essential ingredients in starting a business. It’s a big challenge for new and experienced entrepreneurs as it determines whether your startup will succeed or fail. However, setting up funding is easier said than done.

The U.S. Bureau of Labor Statistics (BLS) reported that about 20% of new businesses fail within the first two years of operation, 45% fail within the first five years, and 65% within the first ten years. Many of these failures are due to the lack of funding, which is why they could not cover their expenses and keep the business afloat during its early stages.

That's why it's essential to ensure you have the proper capital before launching your business. This blog post explores possible ways to secure the funding needed for your startup.

The 'Lack of Funding' Problem

Entrepreneurs should clearly understand how much money is needed to start a business. They should have everything planned out, from the initial costs of putting up the business to the estimated expenses for the first few months or years of operation. The overheads include the fees of day-to-day operations, rent, utilities, and payroll.

When the outgoing finances are disconnected from the revenue generated from the sale of products or services, the business could face a number of financial problems that jeopardize it.

In a study conducted by CB Insights in 2021, the number one reason why startups fail is that they run out of cash or fail to raise new capital. Some of these businesses were unable to get their ideal funding, limiting their businesses' growth. Some didn't get the funding at all, and their startups never went off the ground.

That's why business owners need to calculate and plan out every finance-related matter of their business. They should also consider the possibility that they might be unable to get the full funding they need and have a backup plan in place.

What Are Your Funding Options?

There are a variety of ways to get funding for your startup, and here are some of the most common options:

Personal Investment

Also known as self-funding or bootstrapping, this is when the business owner or the people behind the startup use their personal savings to fund the business. This includes using credit cards, home equity lines of credit, or personal loans from family and friends.

This is ideal for small businesses as it requires little to no paperwork. It's also an excellent way to maintain complete control over the company as there are no outside investors who will have a say in how the business is run.

The downside of this option is that it could put a strain on your personal finances, especially if the business doesn't take off as planned. You might also have to forego other financial opportunities to fund your business, such as buying a house or taking a vacation.

First-time entrepreneurs commonly use this option as they can have difficulty getting approved for other funding options.

Government Subsidies

Different government agencies offer subsidies to businesses, especially those starting up. The Small Business Administration or SBA provides loans and grants to small businesses in the United States. The SBA also partners with many banks and financial institutions to finance business owners.


Crowdfunding is when businesses solicit small investments from many people, typically through an online platform. This type of funding is ideal for businesses with a solid product or service but lack the capital to bring it to market.

The most popular crowdfunding platforms are GoFundMe, Kickstarter, and Indiegogo. These platforms allow businesses to post their project or product online and accept pledges from interested investors. The businesses only receive the funding if they reach their stated goal within a specific timeframe.

The downside of crowdfunding is that there's no guarantee you'll reach your goal. You might also end up with more supporters than you can handle, which can be challenging to manage.

Business Incubators and Accelerators

Business incubators and accelerators are programs that help businesses grow and scale. These programs provide office space, funding, mentorship, and other resources to companies in exchange for a small equity stake.

Incubators are typically geared towards early-stage businesses, while accelerators are for more established businesses looking to scale quickly.

The upside of these programs is that they offer many resources and support for businesses. The downside is that you will have to give up a small portion of the equity in your company.

Bank Loan

Bank loans are one of the most traditional and common types of funding for businesses. Banks will lend money to companies as long as they can provide collateral, such as real estate or equipment. The interest rates on bank loans are usually lower than other types of financing.

The downside of bank loans is that they can be challenging to qualify for, especially for small businesses. The application process can also be lengthy, and you might not get approved for the required amount.

Final Thoughts

Countless different funding options are available for small and large businesses. The best choice for your business will depend on several factors, including your industry, stage of development, and financial needs. You can also do with a combination of any of these funding options.

No matter which option you choose, make sure you do your research and speak with a financial advisor to select the best choice for your business.