There are multiple approaches to funding a start-up that entrepreneurs can take to finance their business:
Bootstrapping refers to founding a business without any external help or capital; the entrepreneur would instead use his/her own assets and savings as the source of funding. This way the entrepreneur does not give up any equity or control of the company early on.
2. Friends & Family
Another common source of funding for entrepreneurs is turning to those closest to them for financing, their friends & family. In this case, the entrepreneur is able to borrow money with little to no interest or give up a small amount of equity for the capital.
3. Angel Investors
Angel Investors are high net worth individuals who invest their own money to fund entrepreneurs and their startups in exchange for equity in the company. These individuals can also be a good source of mentorship & connections as well and might be able to provide technical advice to the entrepreneur.
Crowdfunding refers to funding a start-up by raising small amounts of money from a large number of people. This usually takes place online using crowdfunding websites. In this process people may donate money for the business, finance the business for exchange for a small amount of equity, pre-buy a product for later delivery, or qualify for a reward.
Examples of crowdfunding platforms:
5. Accelerator & Incubators:
Accelerators and incubators are organizations that provide start-ups with support designed to help start-ups grow and scale. These services include access to capital, mentorship, office space, connections, & more.
The main difference between the two is that accelerators work to “accelerate” the growth of already existing companies while incubators work with start-ups at an earlier stage ad “incubate” their ideas.
Below are a list of accelerators and incubators in Jordan:
- Shamal Start
- Zinc by Zain
- BIG by Orange
- The Tank by Umniah
6. Venture Capital:
Venture Capitalists are professional organizations, investment banks, institutional investors and other financial institutions, which invest institutional money in start-ups, usually with an established business model. Venture Capital firms usually invest in start-ups at a later funding stage that are ready to scale. These investors also tend to provide managerial and technical support to their investees.
Examples of Regional Venture Capital Firms Include:
- Silicon Badia
- DASH Ventures
- Hikma Ventures
- Lumins Ventures
- Algebra Ventures
- Arzan Capital
7. Bank Loans:
Another way entrepreneurs can fund their start-up is by taking a business loan from a bank. In this type of debt financing the entrepreneur is able to finance the company without giving up equity in the company, but the entrepreneur will need to have collateral to give instead.