Ways to raise capital for your start-up
By: Mirror Review Magazine
Tags: Investors, Capital, Investment, Entrepreneur, Startup

The most important task for any entrepreneur while starting their start-up is raising the necessary capital for it. It has become very difficult to make people believe in new ideas as there are so many ideas coming into the market every single day due to an increase in the number of want to be entrepreneurs.

But if you feel your idea is something different and likable then here are few ways in which you can raise money for your business:

Bootstrapping:

Bootstrapping is starting your own company with the amount of money you have right now. If your plan is such that you can do well in the money you have with yourself and the assets that you possess then you don’t need to approach any investor at least at the start. This has the advantage of keeping complete control over your own company without anyone else’s interference. If you have enough money as required, then bootstrapping should always be your first choice as this is the most simple and efficient way of starting your start-up.

Family and friends:

If you don’t have enough money as required, then the second way of raising funds is asking for it from your family and friends. This is the safest and easiest way to raise capital after bootstrapping. You don’t have to go through too much paperwork and several meetings before they give you the money for your start-up. This is also another way by which you don’t have to compromise your control on the start-up. Not only this but your friends and family will always be motivating you through your ups and downs which is way better than investors who would put pressure on you to deliver them their promised returns.

Government Grants:

Government grants are a great opportunity for any new entrepreneur, but to get these grants is the toughest part to pass. Any grants given by the US government are surrounded by very strict criteria, but once you manage to pass those criteria, you won’t have to pay it back nor do you need to give away any kind of control to the government. As these are so beneficial, they are very difficult to receive and can be applied for by going through a very long and extensive application process. Not everyone can get these grants as they are few and are mostly industry-specific. So, if you want to get these grants then you have to find a beyond brilliant idea.

Venture capitalists:

Venture capitalists are the ones who provide you capital in return for equity in your start-up. These capitalists are mostly looking for a huge amount of capital investment and are using other people’s money into your business instead of putting their own money into it. Hence, they try to target companies that require a high amount of capital and can give them a high amount of return.

Angel investors:

Angel investors are individuals who have a high amount of money for themselves and are looking for investing in new start-ups. These individuals provide capital to entrepreneurs in exchange for some percent of the equity in your start-up. These are the ones who target small and medium start-ups as the money they invest is completely out of their pocket. They also take part in the company work as advisor or mentor for the company.

Business loans:

Business loans are the most basic and most affordable way to raise capital as compared to VCs and investors. Banks provide loans at a very low-interest rate to entrepreneurs but they do have very strict requirements if the entrepreneurs want to make sure they get the loan. It would be hard for start-ups with no previous record to go for business loans and hence people tend to approach VC firms and other investors more rather than going for business loans given by the bank.

These are some major ways by which you can raise capital for your business. You can see which of the above ways are best for your company depends on many other aspects that should always be kept in mind.