Ways of Raising Capital for Startup

Ways of Raising Capital for Startup

There are many ways of raising capital for your startup. You must consider all options and choose the one that best suits your particular venture. Here we provide an overview of seven common ways of funding to help you weigh the pros and cons of each source and make an informed decision.

#1 Bootstrapping

Bootstrapping refers to the practice of funding your project out of your own pocket. This is the ideal way of starting a new venture, as you will not owe anything to anyone in the process. You are in full control over your business, and you alone make decisions. Self-funding shows your dedication, therefore your project is more attractive to investors. However, if you fail, all the hard work you have put into your personal savings will go to waste.


  • complete control over your business
  • draws further external investment


  • risky; can cost life savings
  • no advice or guidance

#2 Family and friends

Borrowing money from family and friends is another way of raising capital for your business. Relatives and friends base their involvement more on their trust in the business owner rather than the business itself. It is an easy way of funding but it can have a negative impact on the relationships.


  • easy funding process
  • flexible payment method


  • no advice or guidance
  • can damage relationships

#3 Angel investors

Angel investors are wealthy individuals that are looking to invest their own money. Their role in your project may vary depending on the terms both you and your angel must agree on. Your angel investor may fully trust you with the way you handle the funds and have no involvement in your business. Others, however, may want to participate in decision-making and/or demand a certain share of your profits.


  • advice and mentorship from investors
  • flexible business terms


  • partial involvement in decision-making
  • shared revenue

#4 Venture capital

A venture capital firm is a group of investors that are looking to multiply their wealth. They are usually not interested in early-stage investment. VC investors do not like to take risks and fund those companies that are already making profit. If they do decide to fund your startup, be ready to give up control to some extent.


  • large funding resources
  • guidance and mentorship
  • grant business credibility and open opportunities for further funding and partnerships


  • not an early-investment method
  • demand involvement and shared revenue
  • demand a portion of profit when you sell your company

#5 Bank loans

Bank lending is an another investment option. Though banks will not be involved in the decision-making process, you will have to prove that you have a sound business plan, before they are ready to lend you money. This may imply an overwhelming amount of paperwork to be done.


  • many options to choose from
  • fast funding process, if you qualify
  • no involvement in the process


  • risky, implies debt
  • a lot of paperwork

#6 SBA

Small Business Administration are government bodies that are dedicated to assisting small businesses. SBA helps entrepreneurs raise capital and win government contracts for delivering goods or rendering services.


  • Facilitate bank loans


  • Strict requirements

#7 Peer-to-peer lending

Peer-to-peer lending is the practice of receiving capital from a large group of independent investors. Traditional peer-to-peer lending involves the use of a crowdfunding platform where entrepreneurs pitch their projects, and both institutional and retail investors can contribute money.

Token sales are a new type of crowdsourcing in the blockchain industry and involves issuing and selling digital tokens. Token sales differentiate based on the type of the token being distributed:

  • ICO (Initial Coin Offering) sells utility tokens that grant access to goods and services to their holders,
  • STO (Security Token Offering) sells security tokens that work like equities, i.e. holders are entitled to a share of revenue.


  • network of investors draw additional funding
  • less paperwork
  • many options to choose from


  • requires effort and time to collect funding

Bonus info

IPO (Initial Public Offering) is when a company makes its shares available for public purchase on stock markets. This means that retail investors can buy a stake in the company.

Related news

Robinhood App Encroaches on Banking Turf with High-Yield Money Tool

Libra isn't the only payment system that stands to threaten the banks. Popular stock market and crypto trading app Robinhood is going after legacy banks with the relaunch of a cash management feature. Robinhood COO Gretchen Howard is cited in Fortune as saying: "We’re going to come out with a cash management account soon." The […] The post Robinhood App Encroaches on Banking Turf with High-Yield Money Tool appeared first on CCN Markets

Silver’s Rally May Be Fueled by Concerns About Bitcoin’s Status as a Safe Haven Investment

Bitcoin and the entire cryptocurrency markets have incurred a severe bout of volatility over the past several weeks and months, which has primarily been in favor of the cryptocurrency’s bulls. Lately, Silver has also been incurring some positive price action, and one analyst believes that this has largely been driven by investors increasingly viewing Bitcoin as being too volatile to be an effective safe haven asset. Silver Price Surges as Bitcoin Faces Strong Selling Pressure  At the time of writing, Bitcoin is trading down nearly 2% at its current price of $10,400, which is down significantly from its 24-hour highs of over $11,000 that were set yesterday after the cryptocurrency sharply moved upwards before incurring a massive influx of selling pressure. In contrast, Silver has been consistently skyrocketing for the past several weeks, and is currently trading at $16.19 per ounce, which is up significantly from its recent lows of $14.3 per ounce that were set in early-June. Although this type of price movement seems nominal when compared to those seen within the crypto markets, it is important to note that this price surge is quite significant for a safe haven asset like Silver. Gold has also been facing growing buying pressure as of late, and is currently trading at $1,425 per ounce, up from its one-month lows of $1,350. Could Silver’s Price Surge Be the Result of BTC’s Decline? Importantly, one analyst believes that Bitcoin’s recent volatility has done severe damage to its image of being a digital safe haven investment, and that the outflow of capital from BTC may be entering commodities like Silver and Gold. Jim Iuorio, the managing director at TJM Institutional Services, recently discussed this possibility while speaking to CNBC, saying: “I think one of the reasons that silver’s rallied like it [has] is because bitcoin’s kind of been taken off the list of safe havens with its recent volatility, so something had to replace it.” Despite this, Equity Armor Investment’s Brian Stutland explained to CNBC that he prefers both Gold and Bitcoin to Silver while looking at long-term price action. “I’d short [silver]… I’d even throw in a long gold and play the long-short on it. I still like gold better [in the] longer term, or even bitcoin after this big pullback here,” he said. As Bitcoin’s volatile price action continues to unfold and analysts gain a greater understanding of where it is heading next, it is highly likely that the state and status of its recent bull run will grow increasingly clear. Featured image from Shutterstock. Silver’s Rally May Be Fueled by Concerns About Bitcoin’s Status as a Safe Haven Investment was last modified: July 21st, 2019 by Cole PetersenThe post Silver’s Rally May Be Fueled by Concerns About Bitcoin’s Status as a Safe Haven Investment appeared first on NewsBTC.

XRP Ledger Gateway, GateHub Hack Update: The Wait Continues for Stolen Fund Compensation

On Friday, July 19, European-based gateway for the XRP ledger, GateHub released a statement that shared the details regarding a hack that took place in June 2019 along with its ongoing investigation. As per the initial investigation, the hacker was able to access dozens of XRP Ledger wallets in which traders’ crypto assets were compromised. […]
Bitcoin Exchange Guide

Hot news

By continuing to browse, you agree to the use of cookies. Read Privacy Policy to know more or withdraw your consent.