Startup funding is the money that a business needs to get off the ground. It can come in the form of personal savings, loans from family and friends, or investment rounds from angel investors and venture capital firms. In the early stages, startup funding can be used to develop a Minimum Viable Product (MVP) and set up distribution channels. In later stages, it can be used to scale and expand operations and reach new markets.
The type of funding you choose will depend on how much risk you’re willing to take and how big of a return you hope for. Startups typically have to give up a significant percentage of their shares in exchange for funding, so it’s important to have a realistic valuation and understand how that might change over time.
Unplanned financial hurdles, such as unexpected expenses or revenue dips, can throw off your cash flow and shorten your runway. Managing these risks requires being proactive, creative, and adaptable. This might mean slashing costs, looking for short-term financing, or shifting your business model to meet new market demands. Having an emergency fund and backup plans can also help.
There are more sources of startup funding than ever before, but deciding which one is right for you will depend on the stage of your company and your growth goals. In addition to supplying funds, some investors provide expertise and mentorship. Choosing a lead investor who will be involved for a long period of time is an important consideration.