Incremental Funding Is The Best Route Startups


Incremental Funding Is The Best Route Startups

The best original ideas in business, have never gone from 0 to 100. They’ve always taken a quite linear line from a small unknown startup to a high-flying multinational company. If you’re one of the lucky people who knows and believes that you have an original idea, then you must take the same route. Thankfully, it’s been fleshed-out, and many of the ins and outs are well-known. If your idea is worth the money, investors will not hesitate to pour their own hard-earned money into it. You’ll also impress banks and various financial institutions, and they will come on the side to give you their bails of cash too. However, this can only happen if you give your idea an initial push. This inevitably means you’ll need to fund the first couple of years yourself and follow a plan of sustainable and consistent growth.

Betting your house on it

Look back throughout history, and you’ll find hundreds of thousands of people have all done the same thing. In order to give their business an initial push up the mountain of success, they’ve bet their house. So many people around the world, gain a massive boost in funds right at the beginning of their business, due to a secured loan. You might be asking, what is a secured loan? This type of loan hitches itself to an asset which is used as collateral should the payments not be made. This gives loan companies a lot of confidence and therefore, they’re more likely to give you a large loan. You could borrow five-figure loans or even six-figure loans. It all depends on the value of your home but usually, by putting it up as collateral, you could receive a loan up to 75-80% of the price. However, be forewarned, you must be prepared to accept the consequences should you not be able to make monthly payments. Make sure you have a plan that makes sense and has shown some kind of promise such as impressing potential investors at an industry event.

The second round

Hopefully, that initial large loan will last you a couple of years and help you to make real gains in product and or services development. After 2-3 years, your business should be showing signs of great reward and thus be ready to move onto the second stage of funding. Do a thorough inspection of the business’ performance. Every little detail matters. How many products do you sell, types, buyer demographics, locations, and what kind of customer feedback you received, etc. When you have compiled all the relevant facts and figures, you should make an investment opportunity report. For your second round of funding, target venture capital investment companies. By bringing your business to the public this way, you can net yourself a number of private investors. All kinds of people of varying wealth look to invest in businesses that show promise. Normal people with no investment background and professional investors alike will be taking a look at the opportunities you offer.

Industry partnerships

By now, your business will be around 4-5 years old. You’re still just a baby, but if you have shown consistent financial growth, then it’s time to join the other kids in the playground. Industry partnerships are an excellent way to bring about the third round of investment. This is one of the most crucial incremental stages of expansion as you’re working with another business. It’s entirely correct, to act as a lesser supplier and or provider for a larger business. Go around the world or nationally, to various industry events and look for someone to team up with or act as a sidekick. A large business usually has a handful of suppliers, whether it be for materials, accounting, logistics support, customer service professionals and or delivery. By offering your services and products to other businesses exclusively, you can become a part of a much larger entity for the time being. Using their vehicle, you can increase sales and public awareness.

Heading towards maturity

Congratulations, you’ve made it thus far. By now, you should be around 6-7 years of age. It’s been quite the journey but it’s about to get serious. At this stage, one of the best ways to achieve large-scale funding is to go public. An IPO is a fantastic way to gain rapid funding as millions of people have the opportunity to buy your stock. As more is learned about your business and the performance reports you release to the public are studied, more and more investment will trickle in.

Every large business you see arose due to incremental funding. If your business can show consistent growth as the years go by, you won’t have any problems moving from one round of funding to the next.

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