We hear a lot about startups raising millions of dollars, sometimes in multiple rounds. But we rarely hear about the corollary: every time a company takes more money from investors, the founders lose some of their control. The worst case result is that a founder can find himself forced out of a company after it becomes successful.
There are a lot of benefits that go along with raising capital, but that’s a major negative. And there are ways to get your hands on money without giving up a share of your company. You may not be able to get quite as much money, but you just need enough cash to get to the point where you have income from your customers.
- Presell your product: If your customers trust you, you may be able to get them to preorder your product, giving you the cash to actually build it. At the most fundamental level, that’s how Kickstarter and most other crowdfunding platforms work right now.
- Take out a business loan: Banks and other lending institutions often offer business loans specifically geared towards launching a new company. You will need good personal credit to get such a loan.
- Borrow money from friends or family: You have to be careful when you’re borrowing from individuals, but it can offer a way to borrow money without needing the approval of a bank and with better terms. Make sure that you treat the situation professionally, with a clear repayment plan in place, so that your lenders still want to be your friends and family at the end of the loan.
- Take on some client work: While most startup founders quickly reach a point where a full-time day job just isn’t practical, picking up the occasional freelance project — particularly if you find an easy project with a big budget — can add some much needed cash to your budget. It does mean taking some time away from your project, but not nearly as much as a job.
- Rely on credit cards: This is far from my favorite option, because if a company folds, you’ll still wind up owing all the money you charged to your cards. But if you need just a little more money to get be able to launch, using your credit cards could be an option.
Image by Flickr user 401(k) 2012