The Pros And Cons Of Startup

Getting your startup funded is one of the biggest challenges that entrepreneurs face. One can go about this in many different ways. I would argue that the most popular options to fund a startup are bootstrapping, Venture Capitalists and government funding (SBIR, STTR). I will discuss the possible pros and cons for each one of these, the business ideas that work best with each one of these options and other relevant factors that a founder that has to take into consideration.

Bootstrapping a startup is when an investor attempts to fund his or her startup from personal finances or from the revenue of the newly started business. This comes with many advantages as well as disadvantages. One of the biggest advantages to self funding your business

By definition, a venture capitalist is a person who invests in a business venture, providing capital for start-up or expansion. A VC will hear your business pitch and your business plan, then they will decide whether you are a viable candidate to be funded. Each VC has a different process for choosing their founders. Regardless of how they choose who to fund, each VC wants a high rate of return by investing in a promising startup. Hence, not all applicants will qualify for the funding. Out of thousands of aspiring founders, only a few are selected. Less than 0.1% of all businesses are funded by VCs. VCs are a great way to get a business idea off the ground. This option has both, many advantages and many disadvantages. One of the main advantages is the large amount of capital available. The VCs are essentially gambling that your business will become profitable. Unlike banks or loans, they do not expect to be paid back for the money that they gave you. Therefore, this is your money. If all goes well, this money will be put to good use. Another big advantage of VCs is the size of capital available. Unlike other options, VCs usually invest a lot more capital, often in the millions of dollars. This can be a key advantage for startups such as high tech businesses that require a lot of resources to quickly scale in order to compete in a competitive market. Without these large sums of money, many

Essentially, these programs budget some government funds so that domestic small businesses can research and develop potential technology for commercialization. There are many advantages and disadvantages to these programs. A big advantage is that these are not loan programs. Like Venture Capitals, the government does not expect the founder to pay back the capital even if the business fails. Another reason to use one of these programs is that these are not equity investments. You are not giving up any ownership of your startup. The inventor can maintain ownership of the technology. Further, unlike VCs, the chances that you are approved for a grant is much higher. If you have a startup idea that can help to stimulate technological innovation and potentially help the government, a grant like this is essentially free money. Like all options, there are many disadvantages to these government grants. One of the biggest downsides is the lengthy application process. These grants are not handed out overnight. It can take months for applications to be reviewed and approved. In a fast growing market such as the technology, this could be a dealbreaker. The timing has to be taken into consideration. Another possible disadvantage could be the stringent