By Fernando Berrocal

Business models are changing, and finance has a bright future. Those that understand how to take advantage of new prospects for funding that exist will be fairly compensated. The way individuals fund their businesses has evolved, and by 2022, there will be new and developing blockchain-based choices that provide loans outside of the traditional system. In this post, I'll go through practical strategies for startups and entrepreneurs to raise money.

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Funding Incubators (or Accelerators): A “Business Incubator” is a non-profit organization that helps entrepreneurs with resources, mentorship, and connections. The business incubator's mission is to assist new businesses by offering training, finance, and other resources. Since more individuals are interested in helping entrepreneurship, their popularity has expanded recently. They also serve as a means of assisting emerging businesses in finding investors before they are ready for traditional Venture Capital funding.

Accelerators and incubators are springing, particularly in places with excellent business programs at universities. Startups often offer anywhere from 5% to 15% of their equity in exchange for this type of capital, which typically ranges from $25,000 to $250,000. The only disadvantage of incubators is that they tend to focus on technology startups rather than other industries. It will be difficult to obtain finance if you're not in that or closely connected.

Obtain Angel Funding for your Startup: An Angel Investor lends financing to entrepreneurs who are starting a new business. Rather than loan money directly from one person to another, an angel investor invests in a portion of a startup's stock with the expectation of profiting as the business grows. This sort of investment often entails a lesser quantity than that offered by VCs, but it also gives less control to the investors. Angel investors might be friends, family, or wealthy individuals with business and financial skills. They are frequently the founders of successful businesses with a lot of return on investment experience.

Venture Capital is always an option: This is where the majority of a startup's money originates. When VCs invest in a business, they play a behind-the-scenes role and contribute huge quantities of money for promising startups. They usually buy shares in a business and sell when it goes public or is purchased. As a result, if you don't want to give up ownership of your business, you'll have to look for alternative sources of finance.

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VCs offer advice and mentoring, as well as appraising your organization's long-term viability and financial prospects. This is usually the most costly type of funding since it entails the most risk for the investor, who is betting most on your company's success. One of the disadvantages of VC investment is that, because they're spending so much money in your startup, they generally have a lot of influence over how you operate your business.

In other words, you give up control over how you invest your money and the path your business takes in exchange for an amount of cash you're unlikely to get elsewhere. However, this might be a benefit rather than a disadvantage, especially if you don't have much business experience.

Decentralized Crowdfunding: Decentralized finance (DeFi), is a viable alternative for obtaining investment. It's one example of this type of fundraising in action. Every aspect of finance, from lending to accounting, is being transformed by DeFi. It's also changing the way entrepreneurs acquire early-stage investment by making money more affordable and accessible.

Decentralized crowdfunding is a method of raising funds for a business that does not require the use of a centralized bank. This sort of crowdfunding makes use of blockchain technology to enable large-scale gifts or investments. It's comparable to typical crowdfunding sites like Kickstarter and Indiegogo in this regard. Decentralized crowdfunding is distinct from traditional crowdfunding in that it promotes greater openness and confidence between investors and businesses. All transactions are recorded on a public blockchain, making it simple to determine who invested in whatever project.

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Fintech Loans for Small Businesses and Startups: Small businesses and startups may benefit greatly from emerging fintech companies like Biz2Credit. This last business, for example, provides fair loans to small and medium-sized businesses and established businesses to help them develop their operations. The online marketplace has supported over 200,000 small businesses with loans ranging from $25,000 (working capital) to more than $6 million (Common Real Estate loans).

This is an example of a fintech business that may assist you in obtaining the money you require to build your business. A fast web search will turn up hundreds of different businesses, some of which are industry-specific, that can help you fund your project.

Secure funds from crypto-lending platforms: To get capital for your startup, crypto lending may be used in two ways. On one hand, crypto-lending is the practice of lending cryptocurrency using a blockchain-based platform. Compared to traditional techniques, this sort of financing has advantages, including cheaper interest rates, shorter processing times, and the absence of a credit check. Crypto-lending platforms are swiftly gaining popularity because they allow investors to earn interest while also allowing borrowers to obtain money without having to go through a bank. On the other hand, it can also refer to crypto-backed lending. This is a loan strategy in which cryptocurrencies are used as collateral. Prominent crypto-lending platforms such as Ledn are examples of popular crypto-lending platforms where you may use this strategy to raise funds for your business.

In conclusion, there are several options for funding your business in 2022. There are many choices out there for classic types of finance like VCs and incubators, as well as more modern solutions like crypto loans. Keep in mind that not all strategies will work for every entrepreneur and their objectives. Some sources of funding are better for particular phases of a startup's growth than others, and some are better for certain sectors than others. What matters most is that you examine all of the advantages and disadvantages of each choice before deciding how to effectively use your newly earned capital to help your business develop.

Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.

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