Four most common ways for startups to raise funds

  • Business
  • July 13, 2021
Four most common ways for startups to raise funds
When starting a business, having just creative ideas is not enough. Startup funding is also one of the most important things for entrepreneurs to help steer their business forward. For startups, funding is needed to support the business from the early stages all the way to expansion stages to enter new markets. Currently there are many options for startups to raise funds. Today, we're going to tell you 4 common sources of funding that startups should know.

 

According to SCB Bank, there are 2 ways to finance your startup. The first way is through Venture Capitalists (VC) who are investors in a form of organizations that raise funds for well performing companies with great opportunity to grow in the future. VCs generally invest for 3-5 years and also give advice to entrepreneurs while the financial support is given to them based on these 3 main purposes: 

 

  1. For businesses that are in the early stage
  2. For businesses that are scaling or entering new markets.
  3. For businesses that want to acquire shares of a particular business through leveraged buyout or management buyout

 

The second funding source is Angel Investor. They generally provide funding to startups in the beginning stage, using their own money. Therefore, angel investors are suitable for businesses that need a small grant, maybe a few million baht. Angel investors can also offer good advice because most of them have prior management experience.

 

The third way for startups to raise funds is through Government Grant. The government supports businesses in terms of funding for new businesses or startups. Agencies that provide funding include the National Innovation Agency or NIA, and Digital Economy Promotion Agency or depa that supports digital startups.

The last common option to finance your startup, according to an article from peerpower.co.th, is Crowdfunding, which is also a great way to raise funds. Crowdfunding comes from 2 words which are crowd and funding. But in this meaning it refers to raising funds from large numbers of people around the world through an Internet-based platform called Funding Portal. Therefore, entrepreneurs can access a large amount of funding. There are 4 types of crowdfunding

 

  1. Donation Crowdfunding: Funds raised to business owners without asking for anything in return.
  2. Reward Crowdfunding: Funds raised for businesses to create goods and services. The fundraisers will receive products and services produced or benefits related to them in return.
  3. Equity Crowdfunding: Investors have the rights to company’s shares in exchange for capital. They can also have the opportunity to receive dividends from the business in the future.
  4. Peer to Peer Lending (P2P lending): Similar to personal loans. It is a loan application in which the borrower asks to raise funds from investors with the aim of using it for the purposes stated in advance. It raises funds through an online platform, which offers loan agreements and repayments in installments with interests as specified in the contract.

 

In conclusion, even if an entrepreneur has a good team with great ideas to innovate; without funding, it can be quite difficult for the business to lift off. Entrepreneurs should learn more about how to raise funds and ways to approach different investors. 

 

For startups or entrepreneurs who are looking to open a business in Thailand and learn more about funding, True Digital Park is offering the TDPK Startup Booster Program. This program includes mentors and partners who are giving advice to launch a successful startup in Thailand. 

 

Visit: https://www.truedigitalpark.com/en/startup-support/tdpk-startup-booster

Tags

  • Business
  • Startup
  • sandbox

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