7 Ways to Get Funding Fast for Your Tech Startup

“I’ve tried raising money by asking for it, and by not asking for it. I always got more by asking for it.” – Millard Fuller

Have you ever watched Dragon’s Den and fantasized about being there yourself and hearing Duncan Bannatyne say…  “I’m in.” Come on, we know you have you go-getting entrepreneur you. We all have.
Well, this over-dramatic pitching in the Den is one way to raise cash for your tech startup, but fortunately for the camera shy among us there are many easier ways.  And quicker ways too.
If you’re a Hustler looking to raise cash fast, this post should give your imagination a boost.  Just remember, there’s always lots of money out there looking for good ideas – you just have to go find it.

1. Personal Financing

One of the great things about tech start-ups is your ability to get going with low or no overheads. If your costs are low, always consider your options for financing things yourself. A big mistake many young businesses make is investing before they have to.
If you can access some personal finance through your income or savings, one advantage is you don’t have to give away any of your fledgling company, which can be a dent to morale and motivation over time. Nor do you have to worry about paying back debt later down the line.
Also, with your own money at risk, your relationships aren’t in danger, which is a potential downside to involving friends, family and colleagues.

2. Friends, Family and Colleagues

Now, having given that little warning about going to people close to you for funding. Borrowing or giving equity in your business to family and friends can often be a very quick way to raise cash.And while a downside is potential stress on your relationship if things go pear-shaped, some advantages here are getting a usually very decent rate of interest or low equity given away, and the chance to involve people you love in a great wealth-building project which could change their lives too.

3. Credit Card Financing

Ok, we suggest this with a big word of CAUTION of course. But the fastest way to borrow money from a bank or institution is simply with a credit card, and there are plenty of tech business success stories who did things this way. You don’t need all the credit checks and approvals of a business loan. It’s fast cash, right now!But (and it’s a big BUT) that speed and ease comes at the cost of sometimes very high interest rates, should you let things get out of control. Take the time to research intelligent use of credit cards to avoid them should you decide to take this route. This Entrepreneur article lays out the risks.  And MoneySavingExpert gives good guidance on how to avoid the highest interest rates and juggle cards.

4. Crowdfunding

The crowdfunding boom offers you the opportunity to raise money from individuals the country, even the world, over.  It’s a bit like asking friends and family, but expanded to strangers too. Crowdfunding arrangements can be debt-based, equity-based, reward-based, or just asking for donations.  There are massive multi-million dollar and even billion-dollar examples of tech start-ups that have made it using crowdfunding – Oculus VR selling to Facebook for $2 billion is probably the most famous one.The most successful crowdfunding projects are often the ones that can grasp people’s imaginations the strongest on a platform like Kickstarter. If your tech idea is less flashy, but very financially solid and lucrative, perhaps peer to peer lending would suit you better (see below). Here’s a strong and very detailed intro to crowdfunding by Fundable.com.  And watch out for our own step-by-step crowdfunding posts coming soon!
And here are 5 crowdfunding platforms for mobile apps.

5. Peer to Peer Lending

There’s a great overlap between Peer to Peer (P2P) Lending platforms like Zopa and Funding Circle and Crowdfunding.  But we’ll separate them just to illustrate that P2P Lending is for individuals around the world choosing business to lend to, and who often base their decisions more on the solid business fundamentals. Safer tech start-ups can get more attention here.

6. Other Debt Financing

Then of course you have the traditional business funding sources – bank loans. Harder to get, and you need a really solid idea, credit and business plan to win over your account manager. You can go for unsecured business lines of credit, ideal if you’re not sure how much you will need. Commercial bank loans are the most common, and a home equity loan might be the way for you, if you can stomach risking your home against the loan!

7. Other Equity Investment

Now we’re onto Dragon’s Den-style investing.  You can go out and look for an angel investor – perhaps a wealthy individual you know or meet at a networking event like our Hipsters, Hackers & Hustlers meet-ups (full event list can be found here)! A bonus to getting an angel investor is you then have a very experienced businessperson on your team, who can mentor you and introduce you to all their contacts.
Then there’s venture capital (VC) firms – larger businesses specialising in equity investments in promising start-ups. Tech Startup legends like Facebook, Drop Box, Evernote, Square and Instagram all received Venture Capital financing near the start (all these examples from the same giant VC firm actually – Sequoia Capital). But be warned, VC financing is very hard to come by and with both angel and VC financing, you’ll have to prepare to give up a big piece of your pie. These guys are hungry!
Do you need funding right now?

What do you think is the best route for you?

Share and let us know!

 

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