Startup funding cycle is an important phase of company formation. There are various ways of receiving funds for your startup.

Over the last few years, the word ‘startup’ has fast gained momentum in the business technology vista. One often associates the word with those startups that have become torch-bearers for the entire enterprise. Like LinkedIn & Airbnb. These startup companies are now an indispensable part of our lives, making a difference in a large or even a minuscule manner.

But what exactly are startups?

A startup in the larger picture, a small company, managed by a close knit group of people striving to make a difference, by creating something.  In the nascent stages of this process of creation, the company has more expenditure than the amount it is generating as revenue. This is the reason why most startups need what we call as ‘funding’. This funding may come during the initial stages itself from an angel investor in the form of seed money.

Another way that a lot of startups fund themselves is by ‘bootstrapping’. This is a process that involves the entrepreneur garnering funds from his family, friends or maybe even dipping into his own savings to start off. A lot of entrepreneurs agree that this kind of funding allows them more freedom in all terms, be it making decisions or taking a calculated risk. It also makes good managers out of entrepreneurs.

Crowd funding is another idea of gaining funds that is becoming increasingly popular. If your product is good, it gets the funds from the consumers itself. There are two benefits to this. It gives you a platform for showcasing your product; hence no need for strategizing on marketing and foremost, your product is being assessed by the consumers directly. They are the ones who are to assess its utility in the long run anyway. This proves to be immensely helpful in working towards creating a product that the consumers would rather have, or altering the product the way the consumers would like it.

Takeaways:

• Startup funding cycle involves easy but crucial stages. A startup is a firm that is not similar to a corporate but a new idea ready to flourish into profitable returns.
• Sources for startup funds are funding’s from friends and founders, crowd funding, venture capital, seed funding, etc.