Investing an IT startup: where to find money?

30.08.2016

Investing an IT startup: where to find the money?

Attracting investments is an important part of any startup, including the IT startups that can be developed in programming languages, such as PHP, Java, etc. Sometimes investment search requires more time and resources than the business development itself. Often, business development is not possible without attracting investments.

The question of where to find money for implementation and further development of a project concerns IT specialists in the early stages of this process. In this article, we will talk about the most common forms of IT startup investment.

Business angels

A business angel is a private investor with a high level of income who invests money in the development of his or her own company in exchange for a share in it. As a rule, business angels invest in startup projects at an early stage of their development and assume all the risks involved. Business angels can operate both independently and on behalf of a particular organization. They can create mutual funds or syndicates.

Crowdfunding

Crowdfunding is the means to attract funding from public in order to implement IT projects, help developers, support businesses, etc. Crowdfunding implies direct funding from private individuals. It does not require the participation of banks. Crowdfunding mostly depends on the interest of a person who supports a particular IT project. If that person likes a project, he or she tends to be interested in its further financial support. The most popular crowdfunding platforms are Kickstarter and Indiegogo.

Crowdfunding works well for the investment of IT projects at an early stage of development. Having the interest of a certain audience, developers receive a startup capital allowing them to implement their ideas. Thus, they make it clear to potential investors that their project can bring success.

Startup events

Startup events are the meetings where participants exchange ideas with like-minded people. Such activities can take place in a variety of formats.

• Weekends - people gather in order to exchange ideas, work out business models, and make prototypes.

• Presentations - mature projects make short presentations usually using PowerPoint to describe their activities.

• Evening meetings - regular meetings, during which participants discuss important issues. Such meetings are a fine way to talk about your ideas and see how people react to them.

Bank lending

Unlike the above-mentioned forms of investment, bank lending works well for a long-term financing of IT startups. Loan maturity may last from several months to several years depending on the cost of a project and developers’ goals. However, banks grant loans at quite a high interest. High bank loan payments mean high expenditures and possible losses for developers. 

As you can see, there are many options for startup investment. However, only you can decide which option will work well for your project.




 
02.09.2016
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