Having an idea is obviously the first step in building a business. However, this cannot be treated as the only or even the most important factor. Financing is essential in the different phases of the project. Therefore, it is necessary for the entrepreneur to reflect on their monetary needs and what are the ways to get money for startups existing.

Before starting to raise financing, the entrepreneur must make a careful analysis that addresses the following topics:

• needs financing: evaluate the volume of personal resources that can be applied to the business;
• Map the possibilities: identify which ones ways to get money for startups available that better align or coincide with the company's profile, depending on its nature and size;
• Organizing finances: since receiving external capital is a risk for both the investor and the entrepreneur, it is necessary to consider strategies to be taken to maintain a balanced cash flow;
• Prepare presentation: get financing it also requires a business-friendly presentation to secure support from selected entities.

Then the most common will be presented ways to get money for startups. It is important to note that these must suit investment needs. The first source should always come from the investor himself, and the other sources will only serve to complement the self-financing.

Bootstrapping

This term defines the creation of a startup from scratch using only its own resources (money, time, among others). Thus, the only capital inflows come from the first sales. Studies show that more than 80% of startups they are financed through the personal finances of their founders.

It is imperative that the entrepreneur involved with some equity in financing of their own startup. This will convey the project's credibility and trust with potential funders when the time comes to seek outside support.

This method is not easy to follow as it places all the financial risk on the entrepreneur. In addition, extremely limited resources can hinder or inhibit business growth, impede promotion or even harm the quality and integrity of the idealized product.

On the other hand, it has several advantages for the startup. Here, the entrepreneur has full control over his business, enabling him to build his own culture and company values ​​and not waste resources looking for others investment sources.

Create and launch a startup to market through bootstrapping takes at least twice as long as with external financial assistance. It is not an option that all entrepreneurs can choose or follow through to the end. Whether it's because the market is very dynamic and a boost from third parties is needed, or because the entrepreneur does not have the financial conditions to support himself. But, it should always be the entrepreneur's first attempt.

Family, Friends and Fools (3F’s)

This term is widely used in the environment startups and entrepreneurship. Represents the set of individuals that the entrepreneur must turn to in the first place to obtain financial support for your business. Through this method, the capital needed in the early stages of the business is obtained from trusted people. Such as family and friends who believe in the idea's potential.

The reason why the fools are in this group is related to the risk associated with loans or investment in startup. Typically, these individuals are not sophisticated investors, on the contrary, they invest foolishly and sometimes extravagantly. Well, it is highly recommended that any loan or investment be legalized. Thus, all stakeholders know exactly what they can expect from this, whether it is interest, participation in the company's capital, future return or integration into the company as partners.

The financing of the three F’s brings added value since it does not involve the formal process that would be required by another alternative. They will not do a detailed review of credit history or require outside guarantees to provide the loan. Likewise, they will not complicate the payment options and fees applied. Despite the facilities that these ways to get money for startups presents, remains a sensitive issue. It is therefore recommended that the entrepreneur apply a formal and understandable approach to soliciting funds from these individuals.

Crowdfunding

Is an alternative to the most common methods of obtaining financing. It consists of an online collaborative or collective funding platform where individuals make anonymous donations to projects that interest them. Thus, the entrepreneur only has to register in one of the several existing crowdfunding platforms exhibiting your project for a pre-determined period, and anyone interested in seeing this idea come to fruition can donate any amount of money they want, usually small amounts.

Startups and entrepreneurship with a very accentuated social aspect are greatly benefited through this method, due to its public character and without profit objective. However, crowdfunding is also starting to reach various types of businesses, such as engineering and technology.

Besides obtaining financing, it's also a good way to get a first validation of either the Business model want the product to develop and raising partners or partners and customers.

Equity crowdfunding

Derived from the concept of crowdfunding, equity crowdfunding is a collective or collaborative investment platform that converts users' monetary contributions into company shares.

This method is highly sought after by investors. Allows them to finance online at startups and expanding companies receiving a share of it in the form of equity or convertible debt securities. In other words, they may be converted into equity interest in the investee in the future. This allowed individuals with monetary capabilities to invest directly in startups with great growth potential through your computer.

through these equity crowdfunding platforms, interested parties can select and invest in startups and pre-selected companies, getting all the necessary information to make the decision together with them, all in a space of hours, making the process very easy and accessible. So, this represents one of the ways to get money for startups.

Business Angels

Business Angels are generally retired individuals or former entrepreneurs who intend to help new generations. So they invest their own money in startups and small and medium enterprises.

These ways to get money for startups is quite popular in this entrepreneurial environment due to the particularity that they are willing to invest in startups, even with an unfavorable economic scenario. Currently, a BA is considered one of the indispensable players in the process of financing new businesses, especially in the early stages (seed stage e startup stage).

In addition to financial support, they also make their experience and network of contacts available to the entrepreneur. In addition, they offer personalized advice and support, in exchange for a share of the business capital. These entities have more time to devote to the projects they choose to invest, resulting in greater flexibility compared to Venture Capitalists. However, they are not directly involved in their administration, leaving this function in the hands of the entrepreneur or founder.

It has advantages for both sides. From the entrepreneur, the facility to reach interested parties that alone would be difficult to access, and from the investor to know in time the existence of business opportunities.

These can be found online, at entrepreneurship events, through presentations by other founders of startups, among other ways. Despite their tendency to be discreet, Business Angels are not hard to find.

Venture Capitalists

Venture capitalists are investors who finance startups and small businesses with long-term growth potential. These investors can be individuals or companies and are usually involved in several projects at the same time. Consequently, it leads to less time available to help startups. However, they keep track of what is done in each of them. For this reason, this is a good option for companies that are ready for the growth phase, where the business concepts and matrices are already defined.

VCs are a major fromas to get money for startups. Generally, it is aimed at innovative businesses of a technological nature and with high profitability or companies that intend to expand into internal or external markets, where there is a rapid growth of this business. They are characterized by being minority, temporary and committed.

They present value through financial support, evaluating the best use of the capital they have to invest. To do this, they take into account their own aligned incentives in order to allow companies with great potential to have the opportunity to grow. Furthermore, they help transform the idea into a strategy and action plan and open doors to startups through your network of contacts.

These individuals are aware of the risk that exists in financing companies of this uncertain nature. In other words, they assume a shareholding position, providing support in exchange for the company's shares that they help, always having a say in all decisions made in this one.

Incubators and accelerators

another how to get funding for startups it is through the incubation and acceleration programs. are one of main sources of funds for research and innovation projects. Furthermore, they can be an entry point for many types of investors.

These organizations launch tenders for startups and entrepreneurs with innovative business ideas. Generally, winners will be able to enjoy a monetary prize in addition to the various administrative, logistical and technical resources at their disposal. Incubators are aimed more at companies that are in the embryonic or early stages of their business while accelerators are more focused on companies at a more advanced stage and that need to accelerate business growth.

Through their networks of contacts, these entities facilitate access to external investors. Thus, entrepreneurs have the possibility to present their projects to various types of financing source which they would hardly be able to achieve on their own. Investors also voluntarily seek startups inserted in these programs that can support since the high growth potential and its low operating cost make these businesses attractive to investors.

Banks and government agencies

These two groups correspond to forms of financing traditional, better known and more used by companies or entrepreneurs.

Banks

Banks generally are not the easiest method raising capital for startups and small and medium enterprises. The criteria are quite strict for the high level of risk they entail. Having a good idea is not enough, it is necessary to have a solid track record, excellent credit and a well structured business plan. As a rule, they also ask for a personal guarantee from the founders or the existence of a guarantor for this entity to consider providing some type of financial support.

Bank loans are the funding source most used for startups and SMEs where the full amount is made available by the banks in exchange for interest payments since its concession. This is a good option for medium and long term investments as the interest rates are low and fixed.

Bank credits are also widely requested from banks for financial support in the creation and development of a business and follow the same principles as a loan, with some differences. Here, the amount provided is of a lower value, it is intended for short and medium term investments where interest is generally high and variable.

The greater the risk involved in the project, the higher the interest rates, which is why it is essential that the entrepreneur collects and presents as much evidence as possible that proves the solidity of his project in order to obtain the friendlier conditions for new companies than many banks make available.

government agencies

another funding source are those obtained through government agencies. More and more, competitions are promoted both nationally and internationally, aimed at ideas, projects and small and medium-sized companies. The types of support programs provided by government agencies vary from country to country, but in general, they offer more competitive financing rates than those practiced by public and private banks.

These entities provide grants, donations or incentives available to startups and SMEs. However, getting this type of help can be quite difficult due to their strong competition and demanding criteria which in some cases can be detrimental to companies. To obtain this type of financial support, the entrepreneur must make a rigorous search on the various types of program and identify the one or those in which their project fits best since they do not accept any project.

Corporate Venture

The programs developed by large companies are also a good how to get funding for startups and small businesses. In addition to financial support, they also provide the necessary resources, such as a network of contacts and a customer base.

Such investors may become an important source of resources and are focused startups at an initial stage with innovative solutions that can be integrated into these corporations. Invest in startups it also brings benefits to large companies, such as identifying new ideas and innovative technologies that make it possible to combat changes in the sector, increase revenues and profits, among others.

Currently, these corporations are also adapting the concept of incubators and accelerators, launching their own programs and ecosystems to welcome new business opportunities.