Finding creative ways to fund your business doesn’t have involve breaking the law.

So, before you go into desperation mode or look for coins in your couches, there are several ways to start a legit business with legit funds. Loans and grants aren’t exactly creative or available to everyone.

Also, raising money from outside sources can be difficult at times. This is especially true if you have little experience raising money or finding investors.

So, I have compiled a list of creative ways to raise money to start a business. Check it out!

What is crowdfunding?

Crowdfunding is when you convince a bunch of strangers on the internet to give you money.

So, crowdfunding is an internet-based method for funding creative projects or ideas. The idea behind crowdfunding is to use a social media-savvy, online community to pool their money together in order to support a cause or project.

In fact, this platform is so popular that a whopping 309.66 billion people donated their money to crowdfunding.

Crowdfunding has mainly been used by creatives who have found that the traditional fundraising methods are insufficient and not flexible enough for their needs. This includes artists, inventors, and entrepreneurs who need money to start their business.

Also, it may not be be realistic for some people to get a loan. Some people also may have bad credit.

So, this type of online fundraising is meant to help people who don’t have access to the traditional methods of funding.

Crowdfunding websites like Kickstarter allow you to raise money for your dream business. For example, donors can give small amounts of money (less than $10). Donors can also pre-purchase your product or service as a way of supporting your idea.

If you’re looking to raise money from investors, you can also check out AngelList . It connects startups with angels who are willing to invest in new ventures and businesses seeking financing.

Here are some advantages of crowdfunding:

• there’s no application process
• you don’t have to wait a long time to receive your money
• you don’t have to worry about hitting up strangers directly or cold calling people to give you money
• you can just start a funding page online
• it helps you people reach people you would never possibly meet in real life. So, people from all over the world can donate to your business.

Donation-based Crowdfunding

One of the most common ways to raise money from outside sources is through donation-based crowdfunding.

Donation crowdfunding is when people donate to your business without expecting anything in return. So, you’re not required to give anything to anyone who donates to your business through donation crowdfunding.

A popular platform for donation crowdfunding is GoFundMe.

Reward-based Crowdfunding

This is a popular way for entrepreneurs and small businesses to get funding.

Rewards-based crowdfunding is when a person receives a reward or product in exchange for donating to your business.

For example, you could offer an early release on any products or freebies to anyone who donates to your business. You can also reward donors with discounts, free shipping, and other additional gifts after making their pledge.

You can also create your own website (landing page). Then, use your website to connect with social media platforms like Facebook, Instagram and Twitter. So, it will be easy for people to share your campaign with their friends and family.

It’s also important that the project creator keeps track of all the pledges and update the donors on what has been done with the money raised.

Popular platforms for reward-based crowdfunding include Indiegogo and Kickstarter.

Equity Crowdfunding

Equity crowdfunding is a financing method that allows people (or companies) to invest in a company.

For those people who invest in your business, they’ll receive a small piece of ownership in your business or company.

Since the SEC has to monitor equity crowdfunding, you should only use a platform that’s registered with the SEC. So, you’ll need to make sure that the platform is approved by the SEC.

Here are some equity crowdfunding platforms:

• WeFunder
• Fundable
• CircleUp
• Republic
• MicroVentures
• StartEngine
• Netcapital
• SeedInvest 
• Mainvest

Here are some advantages of using equity crowdfunding:

• you can use this platform even if you have credit issues
• you don’t have to make a certain amount of money to qualify, e.g., traditional business loan
• you don’t have to repay back the debt
• you have the opportunity to raise more money, because there are a lot more investors involved
• you can structure your business to make sure you keep the majority ownership in your business (and only offer small ownership portions to investors)
• you can also get people excited about your product or business (and get eyeballs on it) before you even start or create your business.

However there are some downsides to using equity crowdfunding:

• you have to give up ownership in your company
• you have to let strangers into your financial business. So, you have to reveal all of your company’s financial details, which means that anyone can view this information.
• these platforms usually aren’t free. Typically, equity crowdfunding platforms charge a commission between 5% and 15%.
• traditional investors may not look at your business as the best investment, because it will be hard to sell or resell shares of this company

Startup Competitions for Entrepreneurs

Startup competitions are a unique way for entrepreneurs to raise money for their business.

Typically, startup competitions are sponsored by organizations, and have three rounds: 1) submissions, 2) judging, and 3) startup presentations. The winner receives will receive a prize for the best business idea and the runner-ups receive some form of recognition for their work as well (and/or a prize).

Startup competitions require more time than just going out looking for investors. However, they can be great at getting attention from potential investors. And startup competitions can help entrepreneurs refine (or improve) their idea(s) before they launch.

In some cases, these competitions can even secure investment capital from big name companies or individuals who want to back the winner of the competition.

U.Pitch

U.Pitch is it is a platform available available to any college students or people who have graduated from college or a graduate program within the past six months.

Any college students or recent graduates are eligible if they have started a company or they have an idea to start a company. However, the business must be a for-profit business and it must be located in the United States.

Also the business can’t have more than a million dollars raised in capital and it can’t be related to cannabis. There’s no fee to participate. So it’s completely free.

The lucky winner of U.Pitch will win *drum roll* $10,000.

Hatch Pitch

Hatch Pitch is a another way to receive money for your startup. It’s available for startups that have created an innovative technology-based product or service.

The company’s product or service should have launched within the past two years. Or the business will launch within six months after the Hatch Pitch event.

The founders must have some ownership in the company. The company must also have received less than $5 million dollars in funding from other investors or third parties.

Also, the presenter must actually participate in Hatch Pitch coaching.

MIT $100K

The MIT $100k competition is another platform that has a series of competitions. These contests run from September to May. The competitions are called Pitch, Accelerate, and Launch.

During the pitch competition, participants pitch an idea in front of a panel of judges and get feedback on their ideas. During the Pitch phase, entrepreneurs can compete for a $5,000 grand prize and a $2,000 Audience Choice Award.

During the the Accelerate phase, the semi-finalists will be able to present the prototypes of their business to industry experts. These 10 finalists will compete for a $10,000 grand prize and a $3,000 Audience Choice Award.

During the Launch phase, the semi-finalists are expected to present a prototype and their business plans. Participants will also receive mentorship along the way.

The winning team will take home a $100,000 grand prize!

Wrapping It Up

There are no limits to raising money. The only limits are your imagination and the law.

So, as long as you find a legit way to fund your business, you can go far [with a lot of options on the table]. For example, crowdfunding and startup competitions give you a way to start a business without using your own money.

You can also use grants and loans. The point is that you shouldn’t let [your lack of] money stop you from pursuing your dreams of starting a business.

So, get to the money, which can help you make some money.

Would you use a grant, loan, or crowdfunding to start your business?