Startup funding, or startup capital, is money that an entrepreneur uses to launch a new business. The money can be used for hiring employees, renting space, buying inventory and other operating expenses that help a business get started.
Startup capital often comes in the form of self-funding, investors or small-business loans. Knowing your financing needs and business goals will help you choose the right type of startup funding for your business.
Securing startup funding can be challenging, especially if you’re hoping to go the traditional financing route. Although some banks will fund startups, the loans can be difficult to qualify for due to a startup’s limited time in business and revenue. In some cases, offering collateral to secure the funding can help in the approval process.
There are other startup funding options that exist outside of traditional lenders, such as online lenders, investors, grants and contributions of your own money.
In some cases, the type of funding you pick can affect the ownership of your startup. For example, small-business loans typically allow you to retain full ownership of your startup while getting funding from an investor may involve sharing equity and some control of your company.