Looking to start your own business but puzzled as to how you can raise the capital needed? We tip you on some of the ways you can do so in this article.
1. Business loan
Small business loans are still a major stepping stone on the road to success for many entrepreneurs launching a new business. However, loan approval is not guaranteed. You will need to meet specific requirements, like having an excellent credit score and being in business for a certain period of time.
2. Crowdfunding
Crowdfunding is the most recent capital raising strategy to make it onto the scene. Thanks to the internet, startups like Elevation Lab (makers of the iPhone dock) and Oculus (later acquired by Facebook) have become household names. HappyFunders is one of the best Ugandan local currency crowdfunding sites.
3. Angel investment
Angel investors are wealthy, accredited individuals that usually fund businesses alone but sometimes join other angel investors to do so. Ever seen the show, Shark Tank? This is what presenting to an angel investor can be like – so make sure you have a solid business plan and pitch ready, with all the key financial information at your fingertips.
4. Personal contacts
You might not feel comfortable asking friends and family members for money but according to Fundable, 38% of startup founders report raising money through their loved ones. However, mixing family and business may add more stress to the capital raising process than necessary.
5. Venture capitalist
Venture capitalists tend to invest in more mature companies than angel investors, and operate out of a firm, rather than working alone. Compared with angel investors, venture capital firms invest in a lower ratio of businesses that apply for funding – but when they do, they generally invest more money.
6. Private equity
Similar to venture capitalist fundraising, private equity fundraising is when private equity firms buy shares in companies on behalf of institutional and accredited investors. The main difference is that, while private equity is capital invested in a private company, venture capital is funding given to startups or other young businesses that show potential for long-term growth.
Credit: ansarada