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10 Ways to Fund Your Startup: Angel Investors, Incubators & Venture Capitalists
Hello all who are looking for ways to fund your new startup idea! Over the past week or so, I've been posting 10+ ways to fund your new startup idea. And I've been posting very tangible, viable, realistic ways for you to do that. And so far, I've talked about using crowdfunding, bootstrapping and using traditional lenders such as your bank. And in this part of the series, I'm going to be talking about using Angel Investors, Incubators & Venture Capitalists. Such as what they are, how they work and how you can use them for getting funding from!
Angel investors are people that will back your company or business in exchange for some ownership or equity of it. Angel investors usually team up with other angel investors in what are known as "Angel Networks" and pool all of their individual resources and connections and can also provide you with advice on how to run your business more effectively and efficiently. The only downside to using angel investors is that they only like to invest their money in sure thing businesses. Businesses that are a sure thing to be successful. Business ideas that will return their investment quickly. If your business idea doesn't practically guarantee a return of their investment plus royalties on top, it's likely they wont want to help you.
- These guys can be real angels hence their name "Angel" Investors proving to help your startup up idea start up and stay up!
- They can provide your startup idea with the capital it needs to get up and running and stay up and running.
- Your startup business idea must be super solid and a sure fire thing for them to be interested to help.
- They'll likely want their investment back through equity of your business or even part ownership of it.
Incubators are people that can provide you with the things your business needs to get started such as an office room, mailboxes, phone lines, conference rooms etc. Many of them will also be able to offer your some investment and even support with finance, marketing decisions etc. They usually have established networks of experts that can guide and nurse your business to success. The only downside to using an incubator is that they will expect some return in the form of ownership or equity of your business which will have to be agreed on from the start. Another downside to using incubators is that since they will have a vested interest in your business, they may also want to be involved with the decision making process which might not always line up with your goals.
- They can provide you with the things your business needs to start running such as office space, phone lines and the like.
- They can provide you with support, advice and tips on how to run your business successful and be successful with it.
- They will require a return on their investment through part ownership or equity of your business.
- They may want to be told of any decisions before you make them and offer their own instead.
Venture capitalists (or VC's for short) are people that also will invest some initial growth capital in return for some equity of your business. Like incubators, many VC agencies will also be able to provide you with business support, advice and tips to help your business become successful which could be very helpful indeed for someone that doesn't have much business knowledge and experience. The only downside to using a VC is that like incubators, they'll also have a vested stake in your business and may also want to be involved with the decision making process of things. They may even want to add a member of their team to your upper management to overview and or approve decisions first which might not be to your liking.
- VC's can be all you need to use for some businesses especially those without much business knowledge / experience.
- They can provide you with business support, advice and tips to help your business grow and be successful.
- They will have a vested interest in your business so may want to be involved with the decision making process.
- They may want to send in one of their team to overview your business running's and have you run things past them first.
And that completes this part of the series for using Angel Investors, Incubators & Venture Capitalists
to fund your startup idea
! I hope that I've explained enough about each of them and their pros and cons to give you enough insight into using each.
Have you ever used an Angel Investor, Incubator or Venture Capitalist to fund your startup?