How to raise money to start a business

Raising funds to help you build your beginnings as a business owner or entrepreneur is a huge challenge, especially if you are not sure where to begin. Following the wrong path will keep you away from raising those much-needed funds, and will eventually be a waste of time and mental resources.

Nowadays is easier to raise funds than it was decades ago. There are many options to secure your business’s capital, such as angel investors, crowdfunding, getting investments from venture capitalists, among other options.

Here are some ways to raise money to start or expand your business:

  1. Fund your own venture: This is the most common way of “raising funds” when you are just starting out with your business. The founders and other team members can join forces (money) to start up the business. Professional investors prefer this way of raising capital, from the others.

Of course, to achieve this you must have money saved up or other assets that will help you at the beginning.

Using your own capital to fund your company will demonstrate to other possible investors that you are serious and confident about your companies future.

This will also give you complete control over the decisions.

2.Angel Investors: A good example of Angel Investor would be ABC’s Shark Tank. This type of investor will not just fund you, but you could also get some mentorship and valuable advice from them.

You could get to communicate with angel investors on business blogs, social media or LinkedIn. The more people know and approve your idea, they hopefully will be more interested in investing.

This idea is not for everybody, as these people usually expect a big return on their investments. And sometimes they would demand some control over the administrative decisions.

3.Crowdfunding: This is an excellent and low-risk way to raise money if you manage an artistic project or an innovative technology company. You will not only get the capital you need, but you would also get the feedback from the users.

Other potential investors will see how the market already reacted to your product, and will most likely be interested to invest in the near future.

  1. Get funding from friends and family: One of the most realistic ways to get funding is from your own family. They are already aware of your unique talents and potential, and hopefully want you to be successful.

The advantage of this is that they have faith in your abilities and the conditions would be more flexible. The disadvantage would be that they probably don’t have the experience and knowledge that an Angel Investor has.

  1. Take a Loan: This is also one of the main ways businesses fund themselves. You can get this funding through a commercial loan from a a bank (using Moneysupermarket to compare). If you are confident that your business is going to generate enough profit to pay the monthly loan payments, this could be a healthy option for your business.

Some of the requirements are to already have been in business for 2 years, have $100.000 in annual revenue, and a credit score of 640 or more.

If you don’t qualify for this there are other types of loans available with higher interest rates.