As of 2021, 50% of startups failed within five years while 20% failed in the first year. One of the top reasons for startup failure is a lack of funding.
While your cybersecurity startup may have a great idea or a well-thought-out business plan, it doesn’t mean much if you don’t have access to the funds you need. Exploring your funding options carefully is absolutely essential as a startup. You should take your search seriously and look in all the right places.
In this guide, we’ll tell you where you should look for cybersecurity startup funding.
It’s important to realize that while it’s getting more difficult to do so, bootstrapping a cybersecurity startup is an option to consider.
If you have significant savings that you’re willing to use to start your cyber security company or you’re able to get low or zero-interest credit cards to start your business with, you may want to start a business with those funds. There are a lot of benefits to bootstrapping a cyber-security start-up. This includes having more control over your business and fewer investors to answer to.
On the other hand, using personal capital or credit cards to start a business can be incredibly risky and difficult. Additionally, if you don’t have the funds in the first place, then bootstrapping simply isn’t going to be an option for you.
One of the best funding options for launching a startup is cybersecurity venture capital funding. VC funding in cybersecurity has risen steadily in the past few years and even surpassed $20 billion in 2021.
Venture capital is a type of equity financing that is offered by private cybersecurity investors. A VC firm such as Option3 can allow you to get funding for your startup at an early stage.
Seeking venture capital can help you get funding even if you may not qualify for a bank loan or other type of startup capital.
Working with a VC firm is a good option when looking for funding for your cyber security startup. However, working with an angel investor is also worth considering.
Working with an angel investor is similar to getting venture capital funding. With VC funding, you’ll be working with a company that is managing the money of private investors. When you find an angel investor, however, you’ll be working more directly with a specific individual.
An angel investor is an individual who has the funds necessary to invest in businesses that they believe in. Finding an angel investor for your startup can be a great way to get the funding you need.
One of the best options to consider when launching a business is taking out a loan from the bank. There are many small business loan options out there. Many of them can be worth considering, particularly if you’re starting a business that is less risky.
Unfortunately, many banks will not be willing to offer a loan to a cybersecurity startup that has a significant chance of failing. However, there are still some options that might work.
SBA microloans, SBA 7(a) loans, and business credit cards can be helpful for startup owners. Many startup owners would rather take out a loan than work with an investor or seek alternative funding options.
There are many different grants that are available for small businesses and startups that you can apply for. While there is often a lot of competition for these grants, they can serve as great sources of funding if all goes well.
You should check for grants that are sponsored by governments or corporations and see if there are any that you qualify for.
Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBTT) grants are both valid federal grant options that can work well. SBIR grants, in particular, are meant for tech startups so can be a good option to apply for as a cybersecurity startup.
Startup Pitch Competitions
Startup pitch competitions are also worth considering if you’re looking for startup funding. In a startup pitch competition, you can present your idea and business plan to judges and will be aiming to win capital for your startup idea.
There are many different startup pitch competitions out there. Various organizations put on conferences that allow you to apply and present your idea.
Many of these competitions focus on specific industries. This includes technology and cybersecurity.
As a result of pitching your startup idea to judges, you may find some investors who are willing to give you the funding you need to make your idea a reality.
Incubators and Accelerators
Incubators and accelerators are also worth paying attention to if you’re looking for startup funding. For businesses in the early stages, these two types of programs can be incredibly helpful.
A startup accelerator will help offer mentorship, funding, and connections. Incubators will help you develop your ideas and flesh them out fully.
Applying for either of these types of programs can be very helpful for a company that is in the early stages. It can help speed up your startup’s growth and help you find the investors and connections that you need to succeed.
One more option to consider when looking for funding for a cybersecurity startup is crowdfunding.
For startups in the early stages, seeking funding from everyday people can be a great way to launch a service or product. Many people are realizing that cybersecurity can be a great investment. By using a crowdfunding platform such as Indiegogo or Kickstarter, you can pitch your product and offer special incentives to anyone who contributes.
Especially if you have a great idea that will provide a lot of value, seeking funding through a crowdfunding site can be a great option to consider. This is in addition to the other options listed above.
Understanding How to Find Your Cybersecurity Startup Funding
If you want to launch a cybersecurity startup, there are many places where you can begin your search for funding. Business loans, grants, startup competitions, and venture capital are all options to consider.
Are you looking for cybersecurity funding? Contact Option3Ventures today to discuss your cybersecurity investing needs.