How Early-Stage Startups Make Money

The startup industry is a lucrative one. That said, for a startup to obtain the money it needs to grow, there are players that need to be involved and processes that need to be in place

 

Between forming key relationships and crafting the perfect pitch deck for investors, there are a lot of elements involved in getting a startup off of its feet financially.

 

Especially in the early stages, startups make money by making smart choices — investing the right way, reaching out to the right people, building a unique presence and more.

 

Consider the strategies new companies use to attain working capital and sustain a growing business:

 

Investors

 

Investors are one of the most popular means of funding for startups. When a business shows growth potential, Investors put money into the company with the incentive of getting a portion of future profits or even stock.

 

These investors — angel investors and venture fund capitalists alike — aid businesses financially not only to get them off their feet but to earn a stake in the companies.

 

You typically attract these investors by delivering an engaging and informative pitch presentation. These presentations require a creative and clear pitch deck that will sell investors on the value of your business.

 

Fortunately, you can work with a professional PowerPoint design agency that will help you ensure your deck is unique, informative and persuasive. To learn the importance of a pitch deck and where to start, check out this guide to slide design for PowerPoint to give you some inspiration.

Crowdfunding Platforms

Business News Daily defines crowdfunding as “when businesses, organizations or individuals fund a project or venture with small donations from many people.” Typically, these funds are attained by using a crowdfunding platform to showcase the project, provide a means for donation and share incentives like exclusive rewards for those who donate certain amounts.

Kickstarter was a leading crowdfunding platform in the past, but nowadays, there is a wide range of platforms being used for collecting these funds.

Collaborations

Startups make money by spending less — and a great way to keep costs low is by collaborating with other startup companies with common goals in mind.

Especially when working in close quarters like co-working spaces and other spaces dedicated to startups, new businesses can utilize each other’s services and trade labour and work instead of money. By doing this, they can save on costs and form relationships that can be potentially profitable in the long term.

Say, for example, your PR startup provides social media support for a neighbouring web development startup. If you secure a client that also wants a website, that’s the company you will likely refer your client to. It’s a give and take.

Loans

All that said, one way many startups make money is by taking out a business loan. A business loan can provide the funds you need to kick start your business — invest in product, staff and office space.

This way, once you start selling product and generating revenue, a portion of the profits can be utilized to pay off the loan. Loans are often taken out for specific areas of growth like equipment, production, staffing, marketing and commercial space.

At the end of the day, there are a wide variety of channels a new startup can take to earn funds. The best route is often a good balance of the strategies suggested.

David Jackson

David is a personal finance expert, a professional male model, and an entertainment writer.