Getting funded is difficult for any entrepreneur. When it comes to starting a business, but being a female entrepreneur might feel like scaling a mountain.
What are your options now? Let's tell you right now.
HOW CAN I FUND THE STARTUP OF MY SMALL BUSINESS?
When it comes to raising funds, there is still a significant gender gap. This disparity exists despite female-founded startups delivering more than twice as much per dollar invested as male-founded startups.
Consider venture capitalists who invest large sums of money in both small and large businesses. Women received $1.46 billion in total investments in 2016, while men received a whopping $58.2 billion. This disparity exists despite the fact that women start businesses at a rate five times that of men.
So, what's the best way to secure women the startup funds while also potentially increasing your ability to raise additional funds in the future? Your business can apply for grants from several government agencies, but first let's see some other options below.
FUNDRAISING
This idea entails posting a request for financial support for your proposal on social media to assist you in attaining your objective. If you're lucky, many individuals will donate a small amount of money. It's also worth noting that women-led crowdfunding initiatives have a 32% higher success rate than male-led efforts.
PROS ABOUT FUNDRAISING OR CROWDSOURCING:
• You've got nothing to lose. You don't have to pay it back if things don't work out, unlike a loan.
• You're in command. Because your "investors" are not shareholders, you retain ownership and control of your company while seeking funds to get it off the ground.
• If you need long-term funding, crowdsourcing can help you demonstrate to prospective investors that people are interested in what you are trying to do.
CONS:
• In the beginning, you must have a good concept or a marketable product ready to go. For starters, you'll need something to show for your efforts before you can ask for money.
• It's possible that your investors don't reflect the majority of buyers in the market. Most of the people who donate to these kinds of campaigns are "early adopters" of new items and services. Because they like it, it doesn't imply the general public will as well.
• You'll be charged a percentage of the total amount. Most popular crowdfunding platforms like Kickstarter, for example, take a percentage of the proceeds from every successful campaign.
• In terms of long-term funding, this is not the best option. Crowdfunding, on the other hand, may be useful in attracting venture capitalists in the future.
• It's possible that your concept will be appropriated. Ensure the security of your goods (e.g., patented, copyrighted or trademarked). There's always the possibility that someone will develop a very comparable product that's just different enough to get around the patents.
LOANS
Small business loans, term loans, business lines of credit, and other traditional financing solutions are available from banks and credit unions. You will have to pay interest on a loan that you take out to fund your firm.
PROS:
• Banks often have no say in how their customers spend their money.
• The money you make is yours to keep. They do not earn a cut or a percentage because banks aren't equity investors. All you have to do is pay back the principal plus interest.
• The application procedure is simple and quick. Many banks have a 24-hour approval time and a simple online application.
CONS:
• It's not always easy to meet the requirements. Loan approval or a reasonable interest rate can be tough to come by if you don't have strong credit, adequate collateral, or a proven business strategy.
• The entire amount, plus interest, must be repaid.
• Because it's a liability, a loan might have an impact on your company's value.
GRANTS
Grants are an excellent source of startup capital because they are practically unrestricted free money. There are many advantages to relying on a government grant, but there are also challenges.
PROS:
• It's free, free, and yet again, it's free. A grant is free money that you don't have to pay back if you're fortunate enough to receive one.
• It pays to be diverse. Women and people of color can apply for funds tailored just for them, and we think this is remarkable!
• There's a wide range of options. Federal, state, and local governments all offer grant funding.
• Once you've received one grant, applying for more becomes much simpler.
CONS:
• The government complications. It can be difficult to browse through all of the many and distinct specifications. In order to be successful, you need to be aware of these and how they will impact your business or strategy
• Non-profit organizations trump for-profit ones.
• Moving at a snail's pace. This option isn't a smart choice if you need money right away. The whole thing moves at a snail's pace.
GRANT-WRITING TIPS FOR MAXIMIZING YOUR CHANCES OF SUCCESS:
• Find a grant using all of the options accessible to you online. Everything you need to know about Grants.gov can be found in one spot, and there's even an app you can use to make the process even simpler.
• Make sure you're eligible by checking the program's eligibility requirements.
• Pay attention to the application dates, and submit your application on time.
WHICH GRANTS FROM THE FEDERAL, STATE, OR LOCAL GOVERNMENTS ARE AVAILABLE TO SMALL COMPANY OWNERS?
There are numerous federal, state, and municipal government grants available. Checking for government grants can be done using the following internet resources:
Grants.gov: This website provides a comprehensive database of federal grants and enables you to locate these funds. Check your eligibility and submit a grant application online.
You can apply for funding from several government agencies through the SBIR and STTR programs, which support small business innovation research and small business technology transfer. The snag is that you have to meet specific criteria in order to participate. Bio-tech companies' research and development projects fit the type and scale criteria, but putting together a successful application is complex.
Grants can be found at the state and local level on the Economic Development Administration website. Most of the scholarships available are aimed at helping communities and individuals in specific locations improve their living conditions.
