How To Raise Capital For A Startup

There is a a lot of risk involved in investing your time and effort in a startup, even if it is some-thing you truly believe in. On the other hand, going through the difficult startup stage often gives entrepreneurs great confidence in their business, after all if you can convince someone else to believe in your business your are half way there! So, once you have laid the ground work, come up with an idea, a business plan and a proposal, your next step would be to ob-tain the capital you need to get started.

This begs the question - how can a private company raise capital? To answer this we have made a list of the best tried and tested capital acquisition methods that can help you get your business started.

  • 1

    Bootstrapping

    Bootstrap funding your business involves using your own capital to get started. This may be money you have saved up over the years, or even a personal loan. This is a great idea if you business is small, and does not require a large investment to get started.
  • 2

    Family and friends

    Employing friends and family to fund you business is another great way of getting the fund-ing you need, if your business is small. The advantage of this cash generating method is that interest rates are often negotiable.
  • 3

    Bank Loans

    Bank loans are an option for startups of intermediate size, although they can be competitive. If your business idea has the potential to generate a lot of profit, and is potentially expanda-ble, this will increase your chances of getting formal funding. Proper market research proving the feasibility of your ideas will be of great value in convincing investors to invest.
  • 4

    Crowdfunding

    This has become a popular idea for a host of new startups over the last decade, and is espe-cially useful for smaller sized businesses (Source). There is myriad of crowdfunding platforms out there, such as Kickstarter, Indigogo and Patreon, to name but a few.
  • 5

    Angel investors

    Angel investors are typically individuals with a net worth of $1 million or more, or those earn-ing in excess of $ 200 000 per annum. If you have a powerful business plan and a great pitch, you can find angel investors on platforms such as, Funding Post and the Angel Capital Asso-ciation.
  • 6

    Venture capitalists

    Venture capitalists are typically firms that invest in great new ideas, and focus on investing in larger scale businesses that have been operating for a while. They are more pro-active in their approach and offer a more hands on approach to day-to-day activities, which can be a great learning experience for a budding entrepreneur. Getting funding this way has great fu-ture potential, but is very competitive and your pitch will be crucial to convincing them to in-vest.

    Although generating funds for a startup may seem daunting, the good news is that you have lots of options depending on the scalability of your business, and how much money you will need.