More than 627,000 businesses are launched each year. Nearly the same number also close their doors each year. Lack of funding or working capital is one of the key reasons small businesses fail. Even the most brilliant business ideas may fail to see the light of day without a proper funding strategy. Getting funding is more challenging for young entrepreneurs struggling to build their credit scores.

And even if you have a funding source, there are many factors to consider, including the startup's nature and the amount. For instance, getting an angel investor to fund a $200,000 project makes more sense than getting the same amount from a venture capitalist. Here are the top four funding sources young entrepreneurs can explore.

• Personal Investment

Bootstrapping is one of the best funding options for any startup.You use personal cash or assets to finance the business. For instance, you may decide to get a title loan financed car for the company using a personal car as collateral.

You’ll need to pool funds with the other co-founders if you’re running a partnership. Using personal investments to fund a startup also motivates you to work hard to see the business succeed. You risk losing your hard-earned money if it goes bankrupt.

• Startup Incubators

Business incubators can help a startup take off with little struggle. They offer small businesses access to many vital resources necessary for their success. These may include working space, mentorship programs, and technical support. Incubators also offer financial support or link startups to angel investors.

Incubator programs can last for up to two years, depending on how fast a business grows and starts supporting itself. Some incubator programs may also offer funding in return for a stake in the business. Ensure you find out all the information when applying for an incubator program.

• Family and Friends

Convincing family members or friends to give you money to fund a startup is easier than approaching a stranger. What’s more, you’re also free to set the repayment terms. You can repay the debt with interest or you can offer your lenders equity in the business. Or you can agree to pay them for every sale made.

However, there are also downsides to borrowing money from family and friends. It can be detrimental to your social life if you don’t honor your agreement. Think of a possible worst-case scenario like fall outs and resentment before approaching family and friends to ask for money to fund your business idea.

• Pitching Competitions

Many colleges have pitching competitions where students present business concepts or products to a panel in the hopes of winning funding or cash prizes. Unfortunately, not everyone wins. But even if you don’t win, you’ll walk away with expert opinions and learn things you need to do right. 

Here are a few tips on how to enter and win a pitch competition.

• Ensure you have an epic idea
• Do your research and prepare your presentation in advance
• Ensure you have the right mindset
• Create a memorable pitch
• Keep your pitch simple and persuasive