Funding Crunch: 8 Best Funding Sources to Tackle the Initial Seed-Stage (2023)

Funding Crunch: 8 Best Funding Sources to Tackle the Initial Seed-Stage (2023)
5 min read

For startups, gathering funds is crucial to growing and establishing themselves in an industry. In the early stages, it is challenging to find reliable funding sources that they can approach and acquire the necessary amount needed to push their project or services. However, it is not entirely impossible to source money either. With the establishment of numerous funding sources or individuals willing to invest in seed-stage startups, it is possible to achieve early funding goals. Hence, here's a look at a few sources that early-stage startups can approach for a reliable funding source. Also, using a startup guide businesses can have a quick understanding of chosing the right path.

8 Funding Sources for the Initial Seed Stage

  1. Crowdfunding: 
    Crowdfunding invites the public to contribute towards funds that an upcoming business can use to grow, establish itself, and get started in a particular industry. It has become an increasingly popular way for startups to source funds, especially at their early stages. For example, Kickstarter is a popular crowdfunding platform that startups can use to source funds within a given timeline.
     
  2. Seed-stage super angel: 
    It is a relatively new type of funding source, and it refers to investors who want to pool their money in several startups they feel will be feasible with their business. These super angels generally take on the funding of up to 20 or more startups and invest in them. It is an efficient source of financing for startups just starting out to beat funding crunch and find a way to establish themselves.

  3. Micro- VC: 
    These small firms choose to invest institutionalized money into early-stage startups or projects when they feel these businesses may not be able to garner attention on their own. They serve as a valuable funding source for the seed stage and encourage startups or projects to establish their roots and boost their growth performance.
     
  4. Genesis VC: 
    It is another new way of sourcing funds at the early stages of a startup. They work in rounds where funds get contributed by institutional seed investors or significant venture capital fund sources. In a genesis VC round, funds get offered via convertible notes instead of regular-priced equity.
     
  5. Business Accelerator Funding: 
    They serve as funding sources for early-stage startups and provide them with initial funding to boost a project or build their establishment. Business accelerators may also provide mentorship at the seed stage, allowing startups to grasp valuable information to grow within the relevant industry. They may also offer more services in exchange for an equity share in a given startup.
     
  6. Startup Incubators: 
    Startup incubators may be private establishments or hosted by local authorities such as municipalities. These provide similar services to a business accelerator but are also more open-ended. Along with funding sources, startup incubators may provide interested parties with a place of work, mentorship, labs, and other services.
     
  7. Corporate Funding: 
    Often, large corporate institutions look for early-stage startups or projects they can invest in. Corporations may do so as part of CSR activities or as a channel to source potential candidates in the future. Companies look for emerging businesses that will produce promising results or projects that will be highly impactful to the general public. 

  8. Government or Organization Grants: 
    Government organizations or private community establishments often offer funding grants for early-stage startups. These grants are available at the seed stage, provided startups meet the specific conditions listed for these grants with promising results. For example, art and design grants may be available for emerging artists with a unique project they want to build, design agencies focused on creating environmental impacts, etc.

Endnote

A few guidelines are put in place to help determine the position of a startup looking to collect funds. While these may all be reliable sources to collect early-stage funding, a few conditions must be met to qualify for it. These include the type of project in place that needs to be completed, the goal of such project, the vision of the startup, or even innovations that a group wants to develop. Once these conditions are implemented, investors, venture capitalists, or other institutions will be more likely to provide seed-stage businesses with the funding they are looking for.

 

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Elina Nyomi 17
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