Tuesday, February 17, 2015

How to Raise Capital for your Startup?

Raise capital for your startup by Jonah Engler

It is one thing to have a great idea for a startup; it is quite another to have the funding for that idea. Most small business owners do not place the same value on creating financial relationships as they do on technical innovation, and both of these skill sets are equally important.

Below are some of the ways in which you can raise capital for your startup.

1 - Family and Friends

If you truly have a great idea, then you should be able to get some support from the people who are closest to you. In order to keep everything organized, you should treat these arrangements in the same way that you treat borrowing money from a bank. Put everything on paper and pay an interest rate back to the people who trusted your ideas and business.

2 - Peer to Peer Lending

The peer to peer lending industry is a multibillion dollar industry as of 2013. This is one of the best new ways for people to create financial leverage for themselves. If your family and friends do not have enough money to push your idea forward, then this is a great avenue for people without access to larger angel investors.

3 - Banks

There is nothing wrong with the traditional method of financing a business. You need to make sure that your financial world is in order, but this can end up being an advantage. If there is someone looking over your shoulder helping you to maintain your solvency, you gain a better foothold on what you need to do every day in order to keep your business alive.

4 - Equity Investors

If you have access to people who are used to investing in businesses, then you may be able to sell a piece of your business to them in exchange for the funds to push your ideas forward. They will usually require equity in the business, or some part of the ownership.

Equity investors usually have the ability to invest much more into a business than other types of investors; however, equity is also worth much more over the long term should your idea be successful.

If you have a great idea, then you can create a financial backing for it. Make sure that you have your credit in order, and you should have very little trouble utilizing one of the avenues that are mentioned above.

Jonah Engler is a successful entrepreneur, investor, franchise owner and coffee lover who hails from New York City.

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