It is never easy to start your own business but it can be very manageable when you make the right decisions from the beginning of the process. Your business plan has all been laid out but you still don’t have the necessary funding to kickstart you plan. As much as possible, you want to avoid applying for loans from banks or other loaning entities since interest rates and collaterals can be very risky for the business venture. What can you do then to get the startup capital you need?
Whether you believe it or not, there are many creative ways to source funds for your new business and these include the following:
Venture Capital
Venture capital is a common form of business funding in which the company seeks funds from venture capital firms in exchange for their stake in the business. The venture capital firm will then be interested in the business and have a say in running the business with expected rewards and results.
Equity Raise
The equity raise it the traditional method of funding a business. It needs compliance with the federal securities laws as well as other formalities. This gives several shareholders a stake in the business and allows them to vote on the corporate matters.
Partners
Yet another common funding method for a business is through taking on the so-called co-venturers. This means that there will be partners who will be involved in the daily business operations. Aside from spreading the business workload, it also offers extra sources of financing.
Angel Investor
Angel investors are those who offer quick business funding for a small business, at the start of the business, or during the expansion of a business. In general, these investors know the business owner and they invest for personal reasons instead of business ones. A pure angel investor doesn’t really plan to be involved in daily operations although they might have a stake in the business.
Family and Friends
Traditionally, a lot of people receive funding for their business through raising money from family and friends. This form of business funding is not exempt from state and federal securities laws yet it can take on the form of loans as well as other kinds of contributions.
Personal Money
The use of your personal savings is no doubt among the most traditional ways to get a quick business funding. Depending on the specific type of business you are planning to venture, you might not really need a lot of cash to startup. Those who have substantial personal wealth can also choose to invest all or some of it to fund the business. Most businesses fund themselves with the help of a disciplined approach.
Non-equity Crowdfunding
This is also called alternative business funding since its existence is the result of the advent of the internet. It is a form of business funding done online where no equity stake is given to those who will fund your business. Businesses funding with this method usually trade items or other kinds of gifts in exchange for various business funding levels.