Creating a startup while in college is no walk in the park. But it’s worth doing, considering some of the most successful businesses today were founded by college students.
In addition, aspiring student entrepreneurs have lots of resources and opportunities they can leverage and make their dreams a reality–from student entrepreneur programs to mentorship programs. But for any startup to be successful, it needs one thing—funding. So, how do you fund your startup once you’re convinced you have a billion-dollar idea? Here’s how.
- Organize Yourself
Being a student, you probably don’t have enough money to fund your startup. To convince people to invest in your business, you must get organized. Come up with a great and compelling pitch for investors and write a winning business plan.
Sole proprietorships face many legal challenges when it comes to funding, so most financing companies, venture capitalists, and angel investors will require you to incorporate your business before lending you money. Create a corporate structure for your startup before approaching any financing institution.
Also, get a proper bookkeeping and accounting system so you can track all your monetary transactions. This is particularly important if you borrow money from different lenders.
- Understand How Startup Loans Work Before Applying
Students have many options when it comes to funding their startups—getting loans is one. However, it’s important to understand how startup loans work before applying. This ensures you get the best one.
Whether you choose an SBA loan or a conventional loan, each has its own terms, like interest rates and fees. The more you know about all the available options, the more confident you’ll be when choosing a loan for your startup.
Even students who wish to use car title loans to fund their startups must do thorough research. For instance, if you prequalify for a car loan, you can get a better deal from another lender. Familiarize yourself with the language and terminologies lenders use so you can gain an edge.
- Get Funding
After you get a proper understanding of how startup loans work, you can apply for funding. Here are some funding sources you can consider.
- Startup competitions: Startup competitions like Pear Competition are excellent sources of funding–all you need is a strong pitch. Such platforms also offer great networking opportunities. You also gain lots of valuable experience–even if you don’t win.
- Crowdfunding: This involves requesting the general public to fund your startup. You can then offer rewards to donors once business picks up.
- Angel investors: Angel investors evaluate your startup’s potential and fund it in exchange for a stake.
- Government-backed loans: These have very low interest rates. The US Small Business Administration connects lenders to entrepreneurs who qualify.
- A bank loan: This is a good option if you’re confident that your startup will prosper.
- Personal networks: Friends and family can help you raise funds for the startup if your pitch fascinates them.
So, if you’re thinking of building a startup from scratch while in college, go for it. Choose the right lender and your business is bound to succeed.