Launching your start-up often includes start-up funding since getting started can be expensive. Launching your start-up can cost thousands of dollars, which most people don’t have on hand. But those lack of funds shouldn’t get in the way of making your start-up a reality. 

That’s where start-up funding comes in handy. Keep reading to learn everything you need to know about how start-up funding can help you start or grow your business. 

Stages of Start-Up Funding

There are three stages of start-up funding. In this section, we’ll look at how each step works.

  • Pre-seed/seed funding is your first shot at getting funding. It’s all about pushing your idea forward and putting down the money you have set aside. Then, you’ll look for angel investors who will contribute to the funding pool and help you reach your goal. These funds are generally used for research, testing market needs, hiring staff, and production start. This funding stage usually ranges between $500K and $2 million.
  • Series A, B & C funding comes after you’ve proved your start-up’s worth. At this stage, you have a solid customer base and are making a profit. Series A start-up funding starts at $3 million. To qualify for Series A, you must have a specific strategy to increase your ROI. Everyday investors for Series A funding include venture capital firms that will invest in your start-up after seeing data that proves that your company is a good investment. Series B funding will take your start-up to the next level — an enterprise. This type of funding is usually in the $10 million range and is designed for team scaling and market exploration. Series C funding is for further expansion for companies worth over $100 million that want equal funding. Series C funding will sustain your business, allow you to create new products, and continually increase your business worth. Large VC firms and corporate investors are involved in Series C funding.
  • IPO, or Initial Public Offering, allows you to open your company’s funds to the public so they can also invest. IPO funding is a great way to receive funding from sources you might not otherwise be able to access. Just keep in mind that IPO funding often includes shareholders and investors. 

Of course, while these types of start-up funding have advantages, you can also look for other funding sources. Let’s take a look at those. 

Start-Up Funding Sources

  • Bootstrapping is another term for self-funding, where you use your funds to make as much progress as possible with your start-up before asking others for help. Developing your business plan and creating a proof concept is vital for bootstrapping. While bootstrapping is a great option and will impress investors at later stages of funding, it’s only an option if you have enough money to get started.
  • Crowdfunding is a 21st-century innovation that uses the internet for small business funding. You can pitch your start-up to millions of people you’ll never meet, and they can pre-order your product before you’ve even created it. They’re investing in your idea. Crowdfunding websites like Kickstarter and Indiegogo are popular examples. There’s a catch, though. You must set a goal for how much money you want to raise, and you’ll only receive what’s raised if you meet your goal. You’ll want to carefully consider how much money you need to raise and provide that information to crowdfunding websites, so investors know where their money is going.
  • Incubators and Accelerators are run by VCs, government firms, and universities and assist thousands of small businesses annually. Incubators and accelerators help with infrastructure, networking, marketing, and financial assistance. Incubators are for the creation and start-up of your business; they help with the beginning stages of funding. Incubators are all about building your foundation with resources like office space, legal help, and, sometimes, seed money. Accelerators scale businesses up by connecting start-ups with mentors, guidance, resources, and funding. Accelerators invest capital in exchange for equity.
  • Angel Investors can be people or groups that fund start-ups they believe will be successful. Angel investors are very particular about where they put funding; they’re looking for unicorns that they think could be very successful. Angel investors mentor you in exchange for equity.
  • Venture Capital Firms are for start-ups with lots of potential and scalability. These firms’ mentorship and expertise can greatly assist already-established businesses in making a profit and pay back the venture capital firms within three to five years.
  • Bank Loans are an option for start-up funding if you have good enough credit to qualify. Bank loans don’t come with mentorship, but they give you complete control over everything, with the condition that you pay back the loan with interest over a set period. You can apply through the Small Business Administration if you want a loan but don’t qualify for a bank loan. The SBA provides funding to banks for start-ups. You can usually get a $50,000 loan to cover pre-seed funding.
  • Government Programs include small federal grants for start-ups in the science, technology, or health industries. The need to conduct research or environmental initiatives indicates that a government program could be right for you. The best part about these grants is that you don’t have to pay them back. 

Get Your Start-Up Funding from Lighthouse Financial

If you’re reading this blog, chances are you need start-up funding. Let Lighthouse Financial help. Our funding specialists will assess your situation, identify the best solution, and execute the funding process to get you what you need. 

We offer 0% interest for the first one to two years, low monthly payments, and no time-in-business requirement. You can get between $10K to $100K, depending on your need and what you qualify for. 

Start-up funding requires a credit score of 680. If your credit score is below 680, we recommend applying with a cosigner who has a higher credit score, as this will help you qualify. 

Get started by filling out the form on our website or calling us at 888.418.1288.