This is the fourth in a series of blogs that will examine the needs of startups in St. Petersburg, focusing on the various services they may need, as well as available resources and community leaders who are here to help!
The biggest hurdle for any start-up is securing the funding needed to turn a dream into a reality. Unless an entrepreneur has a cache of money at their disposal, they usually have to be creative when finding the money so necessary to their survival. With the rise in popularity of crowdfunding, many have been lucky to not have to delve into their personal savings or take on risky high-interest loans. Today, we take a more in-depth look at several ways a start-up can guarantee funding for their new enterprise.
Personal Savings and Credit or Loans
This is a difficult one as most start-ups do not have enough personal savings to cover all expenses related to getting a business off the ground. However, it is also the easiest to secure if it does exist as there are no processes for qualification or approval. Though all of the pressure is on the entrepreneur, they are not beholden to anyone else, so business decisions and any success can be attributed only to them. Credit is also an option if one can obtain a low interest rate and high limit, and never overlook taking a loan if collateral is available. While it is more difficult to gain approval, a bank usually doesn’t stake any claims on how the start-up will be managed, so no control is shared or lost.
Family and Friends
Some will say business and friends (or family) do not mix, and it certainly can be a tightrope walk that many won’t want to take on. However, asking family and friends to support your endeavor is one of the easiest things to do, and it might be surprising to hear their answers. Some might love the idea of helping one of their own, and it will be easier for them to see your potential than a bank officer who doesn’t know you.
Some call these “Angel” investors, but basically, they are prominent people in the local community who want to see the area thrive, and so they invest in new businesses. While this is an amazing situation to find yourself in, make sure all due diligence is done. There may be strings attached that can affect the business in the long run, so just make sure all details are hammered out before any money is spent.
While grant options can change from year to year, and there is more competition for them, the possibility of a grant allows a start-up the freedom of not having to repay a loan or share control with an investor. With more hoops to jump through in order to get one, a start-up might find it difficult to focus time and energy on the application process. However, with opportunities at the regional, state, and federal levels, it’s an option that should never be ignored.
Technology has brought us a long way, and in the last decade we have seen an explosion in the “crowd-funding” world. It is much easier now than ever before to reach people around the world who otherwise would never know about a potential investment. Many start-ups are taking advantage of these platforms with much success, but be sure to read the fine print. As with any contract, an entrepreneur must know the bottom line to ensure no fraudulent activity takes place. Also, use the platforms wisely and offer appropriate and attainable incentives to the potential investors.
We hope this list helps our Tampa Bay community understand what their funding options are and how to apply them to their own start-up endeavors. If you are a startup in St. Pete or in the surrounding Tampa Bay area, and you need a tech partner, contact Blink;Tech today. Specializing in website design, web engineering, digital marketing, and more, we’ve helped visions just like yours come to life on the web, and we are here to help you.
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The Blink;Tech Team