Taking inspiration from Facebook and some of the other success stories that begin with students having ideas for startups, many now begin the process while still studying. There is nothing quite as agile and creative as the mind of a hungry young man or woman. But, if you are a student wanting to set up a startup, how do you finance it?
Ask the Parents
It may be slightly cliché, but this is the most obvious first port of call. Consulting family and friends can be valuable not just in terms of getting the funding required to set up a startup, but also to get help and advice.
Importantly, if you decide to go ahead and get funding from family or friends, the terms and conditions need to be agreed in advance and a written agreement signed. Without this, you risk conflict further down the line – with a written agreement everyone knows where they stand.
Ask a Crowd
Crowdfunding has become an extremely popular way to kick start a business and depending on the type of business you are planning, there are several ways to go about it. For example, you could ask for funding in return for shares in the company or you could repay the money as you would do a run of the mill loan. Other options are to raise the money through presales, where people buy the product upfront in order to get you started.
Ask for a Loan
Whether it be from a high street bank or a company who specialise in lending to students, taking a loan is another way of securing funding for a startup. This route works well if the amount of capital required is relatively small and not needed for a long period of time.
In addition, loans for this type of project and that are to be paid back with interest should only be taken out by students as part of a solid business plan and not as part of a folly.
Ask an Angel
Angel investors are individuals or organisations that will fund startups and in exchange get part of the company – it’s a Dragons Den type of scenario. And just as with the acclaimed TV show, those who secure funds from angel investors can usually expect to also get help. As the investor has interests in the company, they will often go out of their way to help the startup succeed.
Choosing the right form of funding for a startup is key to its success and so careful consideration of all the options is recommended before you go ahead and set up a startup.