Often, a startup idea appears as a new idea, but it needs financing for it to materialize. However, not all ideas are backed by money for several reasons. However, how is the startup idea funded, and what is its value?
To be a successful startup, an excellent startup idea is needed, a revolutionary idea, but that is not enough. This idea must fit into some of the core business elements: demand and supply, market, and growth potential.
If you have a great startup idea, but you can’t make money with it, this is no longer a startup; it’s an NGO. This is why it is so important, from the start, to think about the business model of the startup. Ask yourself how you will earn money? What is a monetization model? How can I solve a problem in the market and make money through it?
How to finance the startup idea
Once the startup structure is established, you have developed a business plan and think you are ready to go ahead with the idea; then, you will look for funding in favor of the startup idea.
The first thing you can do is to seek funding from friends and family. Go to your friends, acquaintances, and family to ask them for money to start your business. The Americans call this strategy 3Fs, meaning family and friends.
If you are lucky enough to have a wealthy family around, you can borrow some money from your rich father or a relative, but make sure they don’t think they are the ones running the business and pressuring you to call every day, so they know what to do with their money.
From now on, friends might invest in your startup idea, but make sure nothing spoils a friendship faster than loans. Please make sure you explain to them how the project works and create a real money refund plan, don’t tell them to return it in a month and then avoid their phones for a year.
These are referred to as business angels or entrepreneurs eager to fund the startup idea. These people are usually the first to invest in startups, right after family and friends, because they have experience in this field (they have also started a business) and can help you with financing, but also with their network of entrepreneurs, investors, and people who can help you with Idea development.
Funding Methods
Another solution to finding funding is crowdfunding. If you have a product, you can validate the startup idea or product with a crowdfunding project. There you can see concretely whether people want such a product. You and your friends might think that the demand for the product is high, but before you go any further, find out if other people agree with it.
You can choose to look for funding on a crowdfunding platform like Indiegogo. If people respond positively, you will have the financing you need for the startup, if you can’t figure out where the problem is and how you can modify the product to meet market demands.
Another way to raise the necessary funds to start your business is to resort to the national financing program, through which the state proposes to support the establishment of thousands of new companies.
To raise money for the emerging idea, you can also use competitions that assist entrepreneurs of all levels and ages with proven growth potential, eager to enter an accelerated development process. Those who register to have access to investors and business advisors and have a chance to win the big prize money.
Banks can be a solution to financing the project. Lots of banks offer loans to entrepreneurs and companies. It is a traditional way to reach the startup idea’s implementation. To receive funds from the bank, you have to invent an idea, but with precise results, the bank can help you move the business to another level.
Accelerators can be very beneficial for entrepreneurs because they gain access to workspaces, mentoring, and experts who can help them move forward. But such organizations help entrepreneurs in investing.
Last but not least, as an entrepreneur, you can turn to Venture Capital Foundations – Pre-Seed, Incorporated, and Series A. Typically, these enterprises seek to invest in emerging technology companies with high development potential.
What is the value of the idea?
In essence, a startup idea is not worth much. It is a long way from an idea to a successful business. Most businesses go bankrupt in the first or second year of operation. The reasons are different, but a good idea is not the same as a successful business.
“A person, even if he wakes up in the middle of the night, can immediately tell you two or three dream business ideas. Business ideas that he protects with jealousy and thinks about them eagerly whenever life seems terrible. A small part of them starts implementing an idea.”
However, even if you have a great idea and come up with a well-documented business plan, getting capital and investing does not guarantee success.
You do not end up in a situation where you lose a lot of money, time, energy, and business confidence.
“This methodology comes as a solution to the waste of energy, time, and resources involved, as it has been able to reduce the failure rate to 10-20% drastically. Its principles apply to digital and non-digital startups, companies, or NGOs.
In the end, all you have to do is go to work, see if the emerging idea is valid from a business point of view, and then find the right funding.
