The most difficult money to raise is equity for start-up businesses. The most common sources are your own funds and those of family members and close associates. There are also wealthy individuals who enjoy helping new businesses and may have an interest in the kind of business you are starting. These may be former employers or others whose businesses might be furthered by yours. Return objectives vary widely.
Most individuals expect to earn three to five times their investment in a relatively short time.
Rarely do they intend to become permanent investors in the business. Tax considerations are important, and forms of ownership are selected that maximize their personal tax benefits. The amount of money available from wealthy individuals varies. Indirect risk capital may be available if the wealthy individual agrees to guarantee the business's obligations. Most specialize in one or a few closely related industries.