What Is A Startup
In simple words, a startup is a company that is in the early stage of business. It is founded by one or more entrepreneurs. It is found that when an entrepreneur sees the demand for a product or service in the market and decides to produce or develop it.
Startups often need financing. The finance sources can be family and friends, bank loans, or crowdfunding. The founders can also take the help of venture capitalists for investment.
A startup comes with a high risk. There is a big possibility of failure on the one hand. On another, it can flourish well and turn out to be lucrative.
It offers a unique and challenging space for the whole team. The best part is that a startup is full of new ideas and innovations. This makes it a perfect learning space for new employees and interns.
Best For Creative Professionals: Patreon
Patreon
With easy-to-use fundraising and subscription options for artists and other creatives looking for “patrons,” the Patreon platform is trusted by over 200,000 creators, including podcasters, musicians, artists, and writers.
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You can create monthly subscriptions
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Software integrations are available with Vimeo, MailChimp, and more
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Fees start at 5% and go up to 12%, depending on the plan level you choose
Patreon was founded in 2013 by YouTube musician Jack Conte, with Sam Yam, and, to date, the platform has attracted more than 200,000 creators and helped these professionals bring in $3.5 billion in funds, making it the clear winner for best for creative professionals.
Patreon is a crowdfunding platform designed specifically to help creative people thrive by helping them raise funds from friends, family, supporters, and admirers. It’s free to get started with Patreon, however, there is a monthly fee depending on which of the three available plans you choose. The “Lite” plan charges a 5% fee from the money generated on Patreon, the “Pro” level takes an 8% cut, and the “Premium” plan takes 12%. Plus, the company charges a processing fee of 2.9% and $0.30 per payment.
You can switch between the Lite and Pro plans at any time, while the Premium plan requires a minimum of a three-month commitment.
What Are Good Alternatives To Crowdfunding
The growing popularity of online crowdfunding for startups doesnt mean that its the only way to start your businessyouve got plenty of alternatives. Other small-business funding options, like loans and lines of credit, are tried-and-true sources of fuel for startup funding.
If youre interested in a loan or line of credit for your startup, we recommend Lendio. Lendio is a loan marketplace with a quick and easy application process and personalized options for startups.
For more recommendations, check out our ranking of the best small-business loans for startups.
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Why Should You Invest In Startups
Some of the reasons one should invest in startups are:
- Startup investing offers great growth potential. Indeed, it is risky but it can also be rewarding.
- Startup investing is a good idea because it gives you a sense of belief in a new idea.
- It helps you to contribute to an appealing idea that you want to see in the world.
- It helps to develop stronger personal connections. When you have a share in the startup, you feel more connected to it.
- One of the best reasons is that it gives a sense of fulfilment. Seeing an idea come to life with you being a part of it. It is a feeling so many people like to feel.
How To Make Money Investing In Startups
When you invest in a startup via a crowdfunding site, you enter into an investment contract with the company. Broadly speaking, there are four different kinds of investment contracts, each of which offers different ways to make money from your investment:
- Debt. This type of contract treats your money like a loan that earns interest. The contract may pay out a fixed return, such as two times your investment, or a variable return. When you receive interest payments depends on how the business performs over time.
- Convertible note. Instead of earning interest, this contract is a form of debt that converts into shares of stock when a startup archives certain goalslike gaining new rounds of funding. You make money on your investment once the company is purchased by another firm or eventually goes public.
- Stock. Later-stage startups may let you buy shares of stock in the company, much like you would buy shares of a publicly traded company. Just be aware that you cant sell your shares of startup stock. To make money, you need to hold on to your shares until the startup goes public or is purchased by another company.
- Dividends. Successful later-stage startups offer investors the ability to buy shares of stock that pay annual dividends.
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Startup Investing Platforms In India
Today is the digital age. Digitalization has made fundraising or investing easier with the help of online platforms. It is now possible for ordinary people to invest in startups through crowdfunding sites. There are certain terms and conditions like fixed least amount, net worth, and income. Every platform has its own rules.
Here are some startup investing platforms in India:
They Invested Via Leapfunder
” The Leapfunder Note is a sensible and attractive way to place capital in start-ups in the Netherlands “
” Diversification is important in angel investing. Leapfunder is a platform that allows angels to spread their investments. “
” Leapfunder investing allows you to become actively involved in a start-up, just as in classical angel investing, while taking all the hassle out of transaction execution “
” Leapfunder is ideal for investing smaller amounts in a start-up in the very early stages. Such investments can be a powerful addition to a portfolio “
” With Leapfunder you get a great opportunity to build up a diversified portfolio of start-up investments, often investors can play an active role in developing the company “
” When I saw the Leapfunder proposition I thought straight-away: this is what start-ups need. I am an entrepreneur and wish this system had been available when I started my company. “
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How Does Crowdfunding Work
When you use a crowdfunding site you will need to register and create a profile, then you can create your own personal campaign or fundraising page where you can tell the story of why you are raising money and what you need it for, set up a fundraising goal, and start raising money. Depending on the type of crowdfunding site you decide to use, you can start collecting the money within days. Some sites have 30-day campaigns . Funds are deposited directly to the financial institution account you link to your fundraising account upon registration.
What Is Startup Investing
Startup investing means investing in a company in its initial stage. You get equity, a part in ownership, and a share in future profits in exchange for your investment.
Investing in a startup at an early stage can be both profitable and loss-making. If the startup turns out to be a failure, then you lose your investment. If it flourishes, you will flourish in profit too.
For the most part, startups try to raise investments at an early stage. Investments can also be raised later when the startup is at a growing stage.
Startup investing can be risky. But nowadays, many people seem interested to take this risk. Considering the positive side, this risk can be of great worth.
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What Are The Odds Of Getting Funded Through Crowdfunding
Your chances of successfully crowdfunding depend on a bunch of factors, from the platform you use to your own business strategy. That being said, the stats show that less than one-third of crowdfunding campaigns are successful.5
That might sound discouraging, but remember that you can increase your chances by having a good plan, choosing the right platform, and creating a solid campaign.
Why Crowdfunding Is Good For Startups
First of all, crowdfunding is one of the few ways a startup with no track record and no credit can get funded. When you apply for funding through lenders, they look at all sorts of things to decide whether or not you qualify. But with crowdfunding, the persuasiveness of your pitch is what mattersnot your credit profile.
Crowdfunding can also help you streamline the process of taking a proof of concept to prospective investors to see if theres a chance for success. And in some cases, with equity crowdfunding for startups, the investors may help you flesh out your business if your idea isnt viable on the market.
By getting capital up front, product-centric businesses and capital-heavy projects can launch with rocket speed. Of course, not every crowdfunded campaign results in millions of dollars, but there are plenty of crowdfunding success stories that earn $100,000 or more in just a few monthsthats not chump change.
Plus, your business will benefit from the credibility boost that crowdfunding sites can provide. And youll have an eager pool of interested customers willing to pay once your project launches.
Peer-to-peer lending is another way to fund your business through private investors. In P2P lending, individuals and groups extend business loans to businesses to earn money via interest on the loan. Unlike crowdfunding, P2P lending generally has a formal application process with a quick funding turnaround.
Read Also: Private Capital Markets Investment Banking
Best For Individuals: Gofundme
A versatile platform that’s helped individuals raise funds for everything from personal healthcare expenses to keeping local businesses alive, GoFundMe is a clear pick for personal fundraising needs. Its track record of success includes bringing in more than $5 billion in funds from over 50 million donors.
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Flexibility to raise money for yourself, a friend, or a charity
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24/7 expert support available
GoFundMe was launched in 2010 and has become one of the largest fundraising platforms online, having raised more than $5 billion from over 50 million donors. Its success and simplicity help make it the best platform for individuals.
GoFundMe campaigns are facilitated in three simple steps. First, create your campaign by detailing the amount of money you want to raise. During this phase, you’ll tell your story, which can include photos and videos. Next, you’ll share your campaign with your friends and family via social media, text message, and email. Finally, you can manage your campaign, tracking the donations and thanking donors.
A benefit of GoFundMe, compared to other platforms that charge platform fees plus processing fees, is that this platform has a 0% platform fee. The company does have a processing fee, which is 2.9% and $0.30 per transaction.
GoFundMe offers 24/7 expert support, in the event you need any assistance setting up your page or have any questions.
Invest In Businesses You Believe In
Equitise is an Australian & New Zealand investment platform that brings extraordinary opportunities to everyday people. Investing is free and all companies that we partner with are highly vetted.
The mobile app, marketplace and analytics platform for boating!
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Investing in an unlisted business means you get in on the ground floor at the beginning of its journey. As long as youre 18 or over, youve got options for how to invest. The path you choose depends on what youre after and if youre a Retail or Wholesale Investor.
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Angel Websites To Find Investors For Your Startup
Angel investors are highly beneficial for biotech startups who need access to early-stage funding.
Angel investors are individuals with a high net worth who have the ability to provide startups with capital in exchange for equity. While angel investors can choose to make investments in any fundraising round, they will typically provide choose the pre-seed or seed rounds of funding. This is because their investments tend to be in the tens to hundreds of thousands of dollars rather than millions, so investing early means they can get the largest percentage of equity for their money.
Learn about: Funding Options for Biotech Startups
Angel investors are highly beneficial for biotech startups who need access to funding in the early stages of growth. If you are focused on research and development to reach proof-of-concept, you might be too early for most venture capital firms. Angel investors, however, tend to understand these earliest steps in the forming of a company. After friends and family funding, angel investors are the next most accepting of risk in an investment. They are often retired executives who are interested in staying involved in the industry they worked in. By investing in startups, they can continue to put their experience to good use.
Watch this 2-minute video to learn about different types of Angel Investors from Snell & Wilmer Partner, Bardia Moayedi.
Read: What are Angel Investors and Does Your Startup Need One?
What Exactly Is A Startup
First, lets define what a startup is. Its one of those business terms that gets used so much that it can sometimes lose meaning. Knowing exactly what were talking about when we talk about startups is key to making sure you make the best investment decisions possible.
Startup companies are companies that were only recently formed. They arent part of a larger company. Startups often relate to the tech field, but this isnt always the case. Startups are generally founded by a small group of people, often friends or business associates, who have an idea they want to turn into a reality.
Many firms that are now considered big companies began as startups, including Uber, Facebook and even Apple.
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Useful Websites To Find Investors For Your Startup
Creating and growing a startup as well as entering a new market for IT products requires investment support. In today’s article well share some useful sites for finding startup investment, look into some of the features of fundraising, and share where and how best to find an investor.
Startup Jedi
We talk to startups and investors, you get the value.
Helping Ukrainian Refugees 3 Things You Can Do To Help
Although the war in Ukraine is no longer dominating the UK news cycle, there are still many people who are suffering as a result of the conflict. Several of our Cubers have family in Ukraine, and were committed to continuing to support those affected by the war.
Whether youre a founder, investor or an employee, there are still many ways that you can help.
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Investing In A Friends Startup
One of the best ways to invest in startups, though, is to find a personal connection to a startup thats looking for funding. Many startups rely on family and friends for early rounds of funding. Friends, family members or associates who are in the process of getting a startup off the ground likely will welcome your investment.
There are a number of reasons why investing in a startup of someone you know makes sense. First off, you can personally ask questions about how the company is going to work. You can get details on the business plan, the mission statement, the hiring schedule and the company timeline. In other words, you can find out everything you want to know directly from the horses mouth, which lets you make the most informed investing decisions possible.
For startup investing, passion is key. It makes the most sense to invest if you are passionate about supporting both the project and the people behind the project. For most people, youll find no one you are more passionate about supporting than your family and friends, making investing in the startup of someone you know a good choice.
Do make sure you are confident in your friend of family members ability to follow through on the startups plan. You are blurring the lines of business and personal life. Still, think about the bottom line and make sure you are making an investment you truly believe could pay off.
Why To Invest In Startups
Investing in startups is not the safest of investments. It can be very risky. In fact, many startups fail. As such, investing in startups likely is not the way to provide yourself with a retirementnest egg or to make money for purchases like a house or a new car.
Instead, startup investing is for people who want to take a chance on a company they really believe in. It is for investors who believe in the people behind a company and in the companys mission. They want to help the company achieve it and get some returns in the process.
If you want your investments to be more than just a way for you to make your money work for you, startup investing may be a good choice. If not, there are other options, like investing in stocks or mutual funds, that may be a better fit.
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Current Angel Investors Trends Worldwide
The current trends for angel investors have definitely changed the way of investing in startups. Below are some of the current trends of angel investors worldwide:
- Remote investing There has been an increase in remote investing opportunities. Some startups have reported that they did not need to meet the investors when they received their first angel investment.
- Investment habits Some investors said that they became more selective on what they chose to invest in due to the increase in valuations. Other investors found to invest in non-local startups as face-to-face interactions with the founders became less important and easier to communicate virtually.
- High valuations and high quality deal flow Angel investors noticed a trend in extremely high valuations and high quality deal flow. They said that they were surprised at how quick companies can recover quickly while in the middle of the COVID-19 pandemic.
- Sustainability and diversity Investors hope to see an increase in sustainable investment opportunities, and support more ethnically diverse and female founders. More health and wellness tech, femtech are what angel investors are looking for in the future.
