Congrats if you have conceived a startup with a new business idea. However, a mere idea will not help you in taking off. Today as a startup entrepreneur you have to understand the startup ecosystem. Here are some ways for aspiring entrepreneurs can make their idea happen through business incubators, business accelerators, angel investment, seed capital and venture capital.
Business incubators differ from research and technology parks in their dedication to startup and early-stage companies. Research and technology parks, on the other hand, tend to be large-scale projects that house everything from corporate, government or university labs to very small companies. Most research and technology parks do not offer business assistance services, which are the hallmark of a business incubation program. However, many research and technology parks house incubation programs.
An accelerator is almost similar to the incubator, except for a few variants. Normally the association is limited to a specific duration, ranging from a few weeks to a few months. An application process normally is required for startup companies with the new business idea.
Accelerators acquire the stake in the startup, from around 5 to25% of the equity when you are coming up with the new business idea.
As Wikipedia puts it, “An angel investor or angel (also known as a business angel or informal investor or angel funder) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital, as well as to provide advice to their portfolio companies.
This capital is required at the very early stage of business.You can call it conceptual stage or idea stage. Normally this fund comes largely from promoter assets or his/her known friends and relatives.
Venture capital (VC) is financial capital provided to early-stage, high-potential, growing startup companies with the new business idea. Normally, venture capital fund earns money by owning equity in the companies it invests in.
Crowdfunding is a new way of financing startups. Crowdfunding is basically sourcing small amounts of capital from a large number of individuals to finance a new business.The most popular ways of sourcing crowdfunding are donation based, reward based and equity-based.
Peer to Peer Lending
Peer-to-peer (P2P) lending is a mechanism where individuals can get or invest money without no financial institution facilitating in between.
Popular Peer to Peer Lending Sites: Upstart, Funding Circle