What Are The Different Types Of Startup Funding?

Equity Funding

As a catch-all term, equity funding refers to any method of financing your business or getting funding for a startup in which you receive money in exchange for issuing stock. There are several ways to raise equity capital, but depending on how you do it, you may be handing up anything from 1 to 100 percent of your organisation. Among the equity rounds are:

There is a series of types of startup funding

Series A- The initial round of stock given to investors during early-stage rounds is referred to as Series A. Typical Series A rounds run from $2-5 million, give options for 20-40 per cent of the company and are meant to help a company in its early stages of development, from product development to recruiting to marketing.

Series B- Second-stage financing is referred to as Series B. Series B often occurs when the company has met specific business milestones and thereby shown its prospective viability as a corporation. This series is also known as a venture round since venture investors normally get involved at this phase.

Series C- As a company grows, it may seek extra funding to reach future milestones. Each subsequent venture round is listed alphabetically down the line. These financing rounds, as well as future funding rounds that more established companies may face, such as bridge financing, expansion capital etc

Bank Loans funding for Businesses

Business bank loans are among the simplest forms of business capital to obtain. Banks have well-structured mechanisms in place for giving credit to new and existing enterprises, and they fund a vast number of businesses across the country. As a result, it is critical for all entrepreneurs to view business loans as a feasible option and to consult with bankers first when finances are needed.

Crowdfunding

Crowdfunding is the way forward for many people with a company idea but little or no finance for funding the startup. Crowdfunding is a method of finance in which private supporters (individual investors) buy your goods or service before it is released. Crowdfunding can be done through local or digital events, but it is increasingly typically done through crowdfunding platforms such as Kickstarter or Indiegogo.

Crowdfunding is the practice of using small donations from a large number of people to fund a business that would not otherwise be possible. These ventures can get off the ground or launch new projects by acquiring the essential cash flow boost. The majority of these campaigns take place on online platforms, have time limits for raising funds, and specify precise monetary goals.

Raise Capital Using Business Incubators and Accelerators

Early-stage startup entrepreneurs who want to get off to a good start might seek cash by joining a startup accelerator or incubator’s startup programme. Startup incubators and accelerators, while frequently considered to be the same concept, have a few major differences. Early-stage firms can raise money through incubators and accelerators, which are widely available in practically every large metropolis. Incubators and accelerators typically last for 4-8 months, during which time a startup founder is introduced to various founder mentors, investors, and other entrepreneurs who have enrolled in the same programme.

Angel Investing

Angel investors are wealthy individuals who invest in tiny businesses in exchange for stock. Venture capital firms employ investment funds, whereas angels use their resources. You don’t have to repay an angel investor since you’re giving ownership shares in exchange for money. Angel funding is usually reserved for established companies that have moved past the startup stage. Despite their financial potential, these businesses still require funding to develop products or grow.