There are millions of budding entrepreneurs out there who have failed to launch their new business ideas due to a lack of capital. While it’s not easy to get capital for launching a startup, there are several ways you can quickly raise capital and get started. Here are five clever ways of getting funding for your business.
Bootstrap the Business
Upcoming entrepreneurs in sectors such as technology that don’t require a lot of capital to launch or expand are easier to fund. You don’t need a lot of money to start the business and grow, as is the case with companies in demanding sectors such as transportation and manufacturing.
For example, rather than wasting a lot of time looking for an investor to help you launch your mobile app, consider getting a 0% APR business credit card that allows you to borrow money that you can repay at zero or low-interest rates. This is one of the best ways to bootstrap your business idea, especially if you don’t have enough savings. Furthermore, investing your own money could encourage potential investors and lenders to consider giving you more money for expansion.
Try Crowdfunding Campaigns
If you have the right product, all you need is to properly pitch the product idea to the masses and start your crowdfunding campaign. There are several crowdfunding success stories online that describe how entrepreneurs built multinational organizations from scratch.
A great example is the expansion of Formlabs that managed to raise $3 million to scale its operations and manufacture affordable 3D printers in 2013. When venture capitalists started noticing the company’s potential, the 3D printer maker’s investments closed at $19 million.
This means that you can easily connect with like-minded individuals through crowdfunding and quickly expand your business beyond your initial goals. You need to tweak your product and research extensively to understand what resonates with a specific market segment before you craft a pitch and launch the campaign.
Consider Venture Capitalists
Working with an experienced venture capitalist (VC) who knows the effective tactics of scaling a team and understands various founder dynamics can be a good idea. Apart from funding your business, Mark Stevens, an established venture capitalist with 30 years of experience, will bring a lot of valuable industry knowledge to your venture.
VCs may develop an interest in several companies every year but only invest their time and money in a handful. A VC will likely need to have a say in the management of your startup’s day-to-day operations. That is why they only invest in mature businesses with proven and scalable products. While applying for an investment from a venture capitalist may seem challenging, if you’re organized and focused, you can also achieve what other successful startups have.
Talk to Investors
An accredited individual with a net worth of more than $1 million can help you get your business idea off the ground. You can contact several angel investors who have formed a fund or contact an established investor who works alone. Before you approach an angel investor, you need to have a sound business plan and craft a convincing, believable pitch.
Use promising data points that clearly define the current status of your startup and its future potential. Take advantage of helpful resources such as Funding Post and Angel Capital Association to find accredited angel investors.
Apply for A Loan
Getting a business loan or talking to reliable lenders is another practical but traditional way of getting funding for your business. Lines of credit, business loans, and credit cards are popular methods of raising sufficient capital to support a profitable business.
There are several financial institutions and banks across the country that offer term loans and small business administration loans to entrepreneurs. Some of the most crucial requirements you must meet in order to get approved for loan include:
- Have a good credit score of more than 640.
- Own a business that has been operating for over two years.
- Register substantial annual revenue of over $100,000.
While these may not be standard rules for all lenders, you should at least make sure your financial portfolio is strong and clean enough before you start applying for term loans. In case you fail to qualify for loans with good APR, you can consider more lenient business loan options to help expand your small business. To learn about top rated business lenders that can help fund your business quickly, visit Working Capital, LLC. For instance, if your financial portfolio has some outstanding invoices, consider raising capital through invoice financing.
Alternatively, you can opt for equipment financing if you need equipment such as tech devices, heavy machinery, or office furniture. Before you send out any business loan applications, ensure that all your loan documents are in order. For example, you may be required to include your bank statements, balance sheets, profit, and loss statements in the application.
Money can hold back your business from starting or expanding. Since there are numerous ways of raising capital for a business project, you shouldn’t be discouraged if one of the strategies don’t work out. Be persistent, resourceful, and demonstrate due diligence as you pursue each of the methods above.