Raising funds to start a business can be daunting, especially if you have no idea where to start or how to do it. Before letting fear take over, research your available resources to figure out all your options. Gathering investments isn’t impossible and there are several different ways you can go about doing it.
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With over 10,000 businesses failing every year, it’s not always easy to get your company off the ground. Fortunately, there are plenty of strategies available to help you raise capital, such as the following five ideas:
1. Take Out a Personal Loan
When most people think of raising money for a new company, they immediately assume they need to turn to angel investors or venture capitalists. While these are certainly two very common options, several other options may be more viable and appropriate depending on your company’s needs and industry. Consider options such as crowdfunding, seed funding, loans from friends and family members, and even grants from government agencies to help get your new company off the ground.
2. Use Private Equity Funds
Private equity funds are another option to consider when looking for funding. With your company’s pitch deck in hand, you can put yourself out there to a private equity platform looking for investment opportunities that happen to fit your company’s needs. A majority of these private equity firms prefer to invest between $500,000 and 5 million dollars in a business.
The downside? Private equity groups tend to be particular about what types of businesses they’re willing to invest in; so it helps if your idea is based around innovation or technology. While private equity groups won’t ask you to give up an ownership stake, they will want a say in how you spend your money and make decisions moving forward.
3. Get a Small Business Loan from a Local Bank
Most small business owners opt for bank loans when they need money to start or grow their business. The advantages of taking out a loan from a bank include flexibility, availability, and low-interest rates. One disadvantage is that bank loans are often difficult to obtain—especially if you haven’t taken out a loan before or don’t have any collateral. Still, some strategies can help you get approved.
4. Work With Venture Capitalists
Venture capitalists are another option when looking for funding for your startup. These investors take a high-level look at a company’s health before making an investment decision. They may look at financials, market performance, management strength, and stability, etc. before deciding whether or not to invest in a company. As venture capitalists stake their reputation on which companies they support, it’s important to make your business as attractive an investment as possible.
5. Get Funding From Angel Investors
If you have an idea for a business, why not see if there’s an angel investor out there who shares your vision? Angel investors typically support entrepreneurs in exchange for equity, and they can be invaluable in making connections and raising awareness.
If you’re interested in raising money from an angel investor, experts recommend getting in touch with Investopedia’s free Angel Investor Network (AIN). The AIN community includes accredited angels looking to invest $100K – $2 million across multiple industries. No one will promise to invest or lend you money; however, you may be able to partner with them on other projects.
The hardest part of launching your own business may not be in the actual execution, but in getting the funds you need to make it happen. When looking into ways to gather investments for your company, keep this guide in mind to help expedite the funding process.