Looking for funds for your new business?
This blog can surely help with some practical funding options.
First, begin with the inner circle. Your family & closest friends who believe in your vision. Yes, they say don’t mix family and business, but if you and your family are convinced by each other, go ahead! But make it as professional as you can. Hire a lawyer to draw up the papers and the loan terms, don’t just shake on it!
Also, borrowing from the inner circle has its cons. If you ever decide to go public, non-accredited investors have no credibility! So, you have lots to think about, yet friends and family are the easiest sources of early funding!
Find out if you qualify for a small bank loan. Small businesses like a restaurant or salon don’t need much capital, so a bank or credit union can help you with a small business loan. Apart from banks, associations or unions too will need you to have excellent credit or may ask you to keep your home as collateral.
Crowdfunding is the next big thing today. From surgeries to small art projects, everyone and everything seems to look at this very public yet effective source of funding. But it’s not easy, there are many out there, and in much more grave circumstances. So, you must have a product or service idea that is innovative & really compelling, in order to attract attention. You can also lure potential funders with a discount on your product or service once it’s launched.
Incubator funding is another great option especially for a small time, fledgeling businesses. Incubator funding is basically funding in kind instead of cash. Like an office space at below-market rates, or furniture at discounted rates, coaching or training of employees at concessional rates, or any common services or operational costs like network connection, stationery etc.
Venture Capitalists: Now, venture capitalists (VC) are open to investing millions but at the same time they expect a substantial ROI. So going to a VC at the beginning itself, is not advisable, make sure you’ve established your business strongly enough to reach out to a VC.
Angel Investors: Unlike venture capitalists, Angel investors don’t look at profit when they invest in your and your business. They work mainly on conviction & personal relationships. Even so, reaching out to them is quite tough. They are generous yet cautious investors. They will expect you to have a clear plan-short & long term. So better be prepared! Also, angel investors who are part of big networks help you with great associations & contacts which can come in handy.
Funding can get taxing but, if your idea is compelling enough and you have your plans & goals in place, things should go smoothly.
