Home Opinions 5 Funding Myths & Misconceptions Debunked
Opinions - December 15, 2020

5 Funding Myths & Misconceptions Debunked

A lot have been said and written about startup funding. While this pool of information is highly beneficial, it has seen several of myths and misconception over the years.

Here are some of the most misunderstood and false ideas about startup funding you should know about.

Funding equals success

Many founders think that money by itself will magically build a successful business. From what we’ve seen from the fall of startups such as Efritin, Mxit and Tress, that’s not the case. The reality is that money is simply a tool that can help a capable startup make things happen when it’s utilised correctly and combined with a good product, great strategy, and a dedicated team.

All Investors Want the Best for Your Startup

There are plenty of investors and venture capitalists who really want to help you build a winning business, but some only care about the payday. Such individuals will often ask for a big chunk of equity or restrictive royalty packages. Conducting in-depth background checks can help you avoid this kind of investors.

Federal Grants Are “Free Money”

It’s true that there’s no need to pay back federal grants, but they do come with restrictions. If you are given a grant for a particular reason, and the idea does not work out, you are not allowed to pivot.


You Need Perfect Credit to Get a Small Business Loan

Having a good credit score can definitely help you get a loan for your small business, but it is not the only thing that lenders care about. You can always get a loan with less than ideal collateral when you have a winning business plan and a brilliant pitch. 

Banks are the Only Place to Get a Loan

It doesn’t mean you’re out of luck just because a bank has turned you down for a small business loan. The Small Business Administration, credit unions and individuals or small companies are other sources that can also give you a loan.

All things considered, there are several ways to approach startup funding. There’s actually no definite approach and to find the methods that work for you and your startup, you must be able to separate the myths and misconceptions from reality. This will place you on the right path to getting that funding your business needs.


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