5 Ways To Acquire Startup Capital For Your Small Business
#1) Personal Savings
Consider dipping into your personal savings for startup capital. Being that it’s your own money, you don’t have to worry about interest rates, payment terms, collateral, or other stipulations that commonly go along with venture capital.
Even if you don’t have all of the funds necessary to start your business, using some your personal money will reduce your dependence on outside investors.
#2) Friends and Family
Have you thought about asking your friends and/or family members if they would like to invest in your business? I know some entrepreneurs view this option as “taboo,” but it can be a highly effective way to raise capital for your startup business. Family members and friends are often willing to negotiate more lenient repayment terms, and they probably have greater confidence in your ability to succeed than a traditional bank or lender.
When pitching your idea to friends and family, remain professional and treat them as you would a typical investor/lender.
#3) Angel Investors
A third option to consider is to pitch your business proposal to angel investors. This is arguably one of the most beneficial ways to raise capital, because you’ll receive real guidance and expertise in addition to funding. Angels often bring more to the table than just money; they guide entrepreneurs on the path to success, offering invaluable connections, tips, and other information necessary to succeed.
Of course, there are both pros and cons to using angel investors. Before you make the decision to use an angel, read our article here to learn more about this option.
A fourth way to raise venture capital for your startup business is crowdsourcing. This new-age method involves the acquisition of funding by pitching your idea to large groups of contributors – a process that’s usually done online.
KickStarter.com, one of the world’s most popular crowdsourcing portals, has generated over $1,409,339,995 in pledged money for small businesses and entrepreneurs.
#5) Credit Cards
Last but not least, you can always place some (or all) of the costs associated with your startup business on credit cards. Yes, you’ll probably have to deal with higher interest rates, but assuming you pay your bill on time this shouldn’t be a problem.
Read through the terms and conditions of your credit cards before you begin using them for your startup costs. It’s no secret that credit card companies include fees and adjusting interest rates in the terms, hoping users won’t see them.