9 Steps To Raise Capital For A Lean Startup

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Raise Capital

Entrepreneurs who need capital to launch or scale up their business may need to find a methodology that favors experimentation over elaborate planning and customer feedback over personal intuition. By coming up with innovative designs, the entrepreneurs have a chance to secure funding from investors who value unique ideas.

Having done the necessary market research for your line of products or business ideas, you as the entrepreneurs are now ready to start raising that much-needed capital. Here are a few steps and procedures to consider for your lean startup.

1. Bootstrapping

To not find yourself frustrated when setting up a business, you must make sure you have saved up funds that you can easily access. Utilising funds from personal savings or funding from friends and family is called bootstrapping and is highly efficient because most people know and trust you. However, you may not be able to raise as much capital required for the startup, but it is a sure way to increase your base capital. The bootstrapping step for lean startups has its merits, such as little or no bureaucratic processes, flexible interest rates, and easy access to funding.

2. Loans from private lenders

Entrepreneurs with concrete business plans and well-researched products and services can always approach banking institutions that provide funds as loans. Banking institutions offer to fund because the business plan conveys the module of operations, profit forecast, and startup maturity time.

Some banking and private lenders have online platforms that entrepreneurs can leverage to get online cash loans. These bank loans fall under two categories, working capital and funding. The advantage of using banks to raise funds for your startup is that they offer large sums of capital, and the capital gained can fast-track the process of income generation.

3. Product Presale

For companies with an innovative product line, the presale method is a perfect way of raising capital for your new product. Customers can purchase the new product before the official launch. This step to raising capital allows you to build customer trust as well as evaluate the demand.

4. Credit Cards

For already established businesses, a new line of products can seem challenging to fund. By utilising a credit card, these businesses can get an instant funding source as long as they fulfill the minimum requirements.

5. Utilising government programs

You can also look into government business funding programs. Government funding is an excellent source of capital for lean startups. Entrepreneurs are required to submit proposals and plans, and after scrutiny and acceptance by the grant committee, they give you the money. These funds from the government tend to be substantial in size, giving your business surplus capital.

6. Seeking venture capital

Lean startups can decide to fund a new line of products through venture capital. Venture capitals are run by professionals who can offer your startup effective monitoring for sustainable growth. Since they are experienced and have a pool of excellent skill set, your business may benefit from their mentorship and expertise.

7. Crowdfunding

With the rise of social platforms, people can easily share their problems with the world. Therefore, lean startups use social media to create crowdfunding where they can share their business plan and get funding from interested investors. The advantage of using a crowdfunding platform is that it generates interest from people and creates awareness of your startup or new product. It also eliminates the risks involved in placing your lean startup in the hand of investors or brokers who might not have your best interest at heart.

8. Angel Investors

Angel investors are people or groups with vast amounts of money, looking for a business to invest in. Lean startups can tap into angel investors since they offer large amounts of money and are willing to take risks in anticipation of profits. Apart from capital, lean startups can benefit from mentorship from experienced angel investors.

9. Participating in Contests

Programs meant for competitions among startups can also be a fantastic way to source capital. Entrepreneurs must submit and showcase different products as solutions to social problems and in, return, get funded. Example: Competitions for climate change solutions.

In the process of the competitions, the starts up benefit from the media coverage and the recognition of receiving an award.

About the Author:

Ray is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals.

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