How to raise money for your startup

After all, you need significant financial resources to cover the costs of developing, marketing and manufacturing a product. Finding investors will be one of the most important tasks for any new entrepreneur.

Keep in mind that you must develop a compelling product or service before applying for funding. If your business idea lacks a solid product-market fit, it is most likely not worth investing in.

One option that is not ideal but may be necessary for sole proprietors is to raise money on their own. This can be done through a personal investment in the company or through an investment from friends or family members.

These events allow early-stage startup founders to compete with their peers for funding from a group of potential investors. You will be competing against many other entrepreneurs, so it is best to be well prepared for these events. Students at UC have several options for obtaining early funding through business-focused pitch events.

Young entrepreneurs often turn to startup incubators and accelerators for financing. These cohort-based programs mentor small business founders and provide the opportunity to connect with potential investors. For example, UC has the Venture Lab Pre-Accelerator for entrepreneurial community members.

Angel investors invest money in small businesses that they believe are profitable. However, you will likely have to give up some control of your company to receive funding from angel investors. Most often, these people show up after your startup receives its initial funding but before venture capital firms get involved.

Although government subsidies are lucrative, they are subject to fierce competition due to their non-binding investment approach. You will likely have an easier time getting an SBA microloan with an investment of up to $50,000 from the US Small Business Administration. Personal loans are relatively easy to secure but come with high interest rates.

The fastest-growing startups are most likely to receive funding from venture capitalists. These companies make money by investing early in companies with significant growth potential and selling their shares later for a significant profit.

There’s no getting around it: raising money for your startup can be a daunting task. However, the business world is teeming with potential investors looking for promising companies. In addition, the government provides grants and loans to help entrepreneurs start up.

CincyTech, Main Street Ventures and Fireroad Ventures offices in UC’s 1819 Innovation Hub. First photo/UC Marketing + Communications; Second and third/Stephen Kenney

Although not all startup founders have access to UC’s extensive resources, communities often have multiple investment firms. The 1819 Innovation Hub alone hosts CincyTech, Main Street Ventures and Fireroad Ventures as potential venues for Cincinnati-based entrepreneurs looking for funding.

Burkhart offers some additional advice: “As important as it is to focus time and energy on your core business that you are raising funds for, sometimes having the right side hustle to generate income for yourself can help you “You can continue to invest as much as you can in your business.”

Don’t give up if your investment search drags on. Although finding a first round of funding isn’t always easy, the process is crucial to getting your business off the ground. And remember: your determination and courage as an entrepreneur will likely pay off over time – literally.

Featured image above: Discussion during a business meeting. Photo/Adobe Stock