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How to Launch a Startup with Zero Capital?

startup with zero capital

It’s not uncommon for entrepreneurs to launch a startup without capital. Many startups rely on their skills and unique ideas to attract external financing.

You can also follow these steps to launch your dream startup with zero capital.

Prepare a Startup Plan

The first step is to formalize your business idea. It includes formally writing a business plan and assessing the financial side of your business idea.

Consider the startup costs from registration to launching the set-up phases. Then, analyze what type of technology equipment and human resources will you need.

A formal business plan covering every aspect of your startup idea will help investors understand your financial requirements as well.

What are the Sources of Startup Capital?

Then, there are two types of startup capital primarily; debt and equity financing. At inception, you’ll likely face difficulties in receiving debt financing.

Here are a few options for you to consider for startup capital.

Bootstrapping or Self-Funding

Self-funding or bootstrapping is an ideal option for entrepreneurs looking to scale up their businesses. It involves funding a startup gradually as and when they need to borrow money

The idea works well if you have the skills to run a successful business. The biggest advantage of self-funding is being your own boss and not compromising ownership stakes or paying interest costs.

Angel Investors

Angel investors are wealthy individuals or a group of individuals who invest in startups. If you want to secure investment from angel investors, you must possess a unique business idea or an excellent business plan.

Angel investors usually provide small startup funding of up to $1 million.

Venture Capital

“Venture capital platforms provide substantially larger funding to early-stage businesses,” explains Rosca Technologies.

“VCs usually do not fund startups in the beginning.”

“So, this option will work for you if your business idea is successful and you need capital for business growth in the early stage.”

“VCs offer managerial and entrepreneurship skills on top of capital as well.”

Incubators or Accelerators

Incubators or accelerators are not common capital investors. They usually exist in technology hubs and invest in selective businesses.

Incubator entities provide tech support, mentoring, workspace, and networking support to startups with excellent business ideas.

You can use this option if you are looking for non-monetary capital investment.

Grants

Government entities and large corporations fund contracts and grants to startups. You do not need to repay this amount and keep the ownership stakes as well.

However, winning or qualifying for government grants is challenging. If you can beat the competition, it’s free capital for you.

Crowdfunding

Crowdfunding means pooling investors together to fund a business. Online crowdfunding platforms are bridging the gap between investors and businesses seeking equity capital.

You may have to forego equity stakes or repay interest to compensate the investors through this method.

Conventional Debt Financing

Debt financing usually is harder for startups unless funded by government entities like the SBA.

You can look for conventional debt financing sources like a commercial bank loan, business credit card, line of credit, or term loan.

In many cases, a lender will usually require a personal guarantee or collateral from the startup.

Make a Persuasive Pitch

Whatever source of capital you aim to acquire, you must create a persuasive pitch. You’ll need to convince a lender to trust your startup idea and the business plan.

A compelling investment pitch can help you acquire any type of startup capital and pursue your business idea successfully.

Follow Up

You may not win the investment from investors right away. It’s important to follow up and get feedback from investors.

You may need to make a few changes to your business plan or investment pitch for another presentation as well. Then, utilize your network and references to get the best results.

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