Where to Get your Funds
The secret to being a successful entrepreneur is to bootstrap the business you own and riding it to success. The way you do this is not just by finding funding from your own personal capacity but by being aggressive in getting these funds from external sources as well. A trend has been set however that if you want your startup to hit the ground running, you are going to have to be funded largely from investors outside of your company. This is where venture capitals and high net worth individuals, angel investors, come in. They normally are more inclined to put their money in investments they know are going to fetch a decent return in the long run. Such industries include some of the fastest growing sectors such as life science technologies. It is also worth it to note that most of these investors choose to cram into certain regions in the US. If you wanted to get even a chance in fund formation, you had to seek them out where they linger.
The good news is that, nowadays, we are seeing more distribution of these potential investors across, not only the US, but a host of high value individuals across the globe. Major investment hub like the land of tech giants in Silicon Valley, New York and Boston will still continue to be the center of these investments. But now, there is much reason to be optimistic about getting fund formations up and running in places like Beijing and Shanghai.
A few decades ago, it was thought of that the only way to get funds was through venture capitals. Angel investors then were largely unknown though there were a few who were able to take advantage. In today’s fund formation practice however, we find out that there are a lot of creative ways to come up with funds.
New Sources of Funds
As stated, there are now quite a few ways to start your fund formation. Some of them are going to be discussed below.
Social impact Funds
As lives continue to get easier for some parts of the world, a moral awakening starts to unfold. There has been a growing demand among the investors to divert their funding towards socially targeted endeavors. If you intend to start funds using these as your main vehicle, you have to consider a few things. First is measurement, in order to pitch a successful impact fund, you should be able to quantify how much exactly are you going to be helping. For instance you should count the number of houses built, or miles to travel your doctors. And in some larger cases, number of families brought up from poverty and others.
Academic Funds
As the melting pot of the greatest minds of our times, universities have also stepped forth towards getting on the investment game. There are bonds built upon schools of thinking that does not simply waver as time goes by. In these kinds of funds, the goals are usually the same, launching profitable ventures that has solid academic work to back it up. The prospect of earning money is almost secondary to having to be able to further the field with researches and advanced study.
Corporate Funds
Corporations have become the main players in all of the business world. They thus espouse a healthy innovative environment for their own benefit. As much as 10% funding, on average, for most corporations are set towards research and development. This is mostly because they want to outdo their competition by beating them in the patents and trade assets race. You do not, however, need to be part of the corporation to get corporate funding. As an external entity to the company, you could hint at giving them incentives for funding your startup such as exclusive selling rights or even giving up portions of your business to them.
Accelerator Funds
Unlike before, where startups approach investors only for their money, there has been a trend where investors are sharing knowledge, work force, and office space with their partners to speed up their growth. Such is the case for accelerator funds that has been growing even more popular because of reality TV shows that feature exactly that. To delve into successful accelerator funds, as a startup, you have to choose investors that would specifically pique their interests. More than just an income generating venture, these investors want to spend time with your business in a way that will ignite their passion.
Seed Funds
As the name suggests, these are funds that start at the exact beginning of the company. Instead of giving all the required funds to drive the company, they encourage other investors into starting the business with them along with you as the main proponent. There are usually two reasons for starting these kinds of fund formations. One is that the required fund is too much for one investor to handle and thus would rather share the risk among other investors. And two, most investors want to diversify their assets as a form of hedging.
State Funds
It is not uncommon for people to involve themselves into the creation of funds using government assets. For some cases, however, this might be the only way to do so. For instance, military contracts are more likely to be pitched for the state than any private individual. Public works, schools and other community based ventures can also take funding using these means.
Fund formation can be a very challenging task and in the end it might not even pan out. It is quite interesting and a very valuable learning experience however and can teach you a lot more than just how to make money. The most important trait that you should have in case you want to start your own fund formation campaign is perseverance. As startups usually lasts a decade at the minimum you have to be prepared to see things through towards the end.
