To develop his business, every entrepreneur requires money. Not everyone can access large amounts of money, particularly when they are needed. You can apply for a bank loan, but this isn’t the only option. Attracting investment is a better option for startups.
We’ll look at some of the most popular options to attract investment for startups. These include angel investors and strategic investors. As this is a very obvious option, we won’t cover family and friends separately as a funding source.
This article was written by the Omega team, a fintech company that provides a platform for entrepreneurs. It offers a Multi-currency Business Account with European IBANs to facilitate international payments.
Business Angels
Angel investors are people who invest in growing companies. Such an investor typically receives an equity stake and makes money when they sell it for a profit. There are scenarios in which a business investor could receive dividends on future profits.
Business angels are professionals who have an in-depth understanding of their industry. These investors build a portfolio that includes projects they believe will be in high demand.
It is best to find a business investor who has a niche interest in your startup. Investors with experience in your field can help you set up business processes, and increase the chances of a successful outcome.
Startup Accelerators
Accelerators is a specialized training program for startups. Experts provide the training, which helps aspiring entrepreneurs refine their concepts, study the market, identify their target audience and meet with potential investors.
Venture Capital Funds
A venture capital fund professionally manages the money of investors. It invests in companies that show a high growth potential. Venture capital funds do not invest in projects at an early stage because the future of those projects is still uncertain. It is therefore wiser to seek out a business investor at the start of your entrepreneurial journey.
Venture capital firms can help startups that want to grow and expand their market share. The goal of venture capital firms is to sell their stakes in the company to make a profit within a few short years.
Venture capital funds are usually specialized in certain industries such as finance or technology. We recommend looking for funds that have an interest in the same niche as your startup.
Investor Clubs
The club is similar to Business Angels but includes many private investors. Such clubs offer the advantage of finding multiple investors at once for your startup.
Startup Grants
Different government and commercial funds organize periodic competitions in which the winners receive financing for their startups. To participate in the competition, you will need to meet certain requirements and provide a report about the funds used. These contests are often held and open to all.
Strategic Investor
A strategic investor is an organization that purchases other businesses to create synergies. This type of funding is not appropriate for startups that are still in their initial stages. The business should be stable and have a high level of visibility, including a presence at industry events.
