Effective Ways Startup Businesses Can Raise Capital

According to the bureau of labor statistics, more than 94% of startup businesses fail during their first years of operations, and it turns out, lack of funding is the most common reason for failure. Money is the bloodline of all businesses, and you can’t launch your business nor manage operations for long without it. Fortunately, there are several ways you can obtain funds to make your idea into a reality.

Besides crowdsourcing from sites like GoFundMe, here are other ways to raise capital funding for your new business:

Seek Grants

Although you won’t get a huge check from this, grants are easily accessible. You can get it from both government and private bodies interested in generating employment opportunities or improving the economy. Grants provide you with enough funds to set up operations, buy manufacturing equipment, and give workers wages for a short period.

However, getting a grant can be a lengthy and complicated process, but it’s still worth a try since it’s generally risk-free and can give you enough funds to operate for the next couple of years.

Approach “Angel Investors”

An angel investor is a person with a lot of money interested in investing in the next big idea. The best part is that most angel investors don’t only give you a generous amount of funding to help your business but will also mentor you throughout the venture, giving you advice and warning against common mistakes. You can find these individuals in online associations or visiting any pitching events and conferences in your area.

glass full of money

Bootstrap Your Startup

If the business you plan on establishing is in an industry that doesn’t require a lot of startup capital, such as transportation or manufacturing, you can potentially fund your venture. For example, if you don’t have enough savings to fund your operations, you can get a low-interest business credit card to get enough expenses without incurring too much interest. Although it has its risks, if you believe in your vision, you should be comfortable enough to invest your own money into the business. Additionally, investing your own money can grab the interest of investors and lenders more down the line.

Enter Competitions

A low-risk way you can gain some capital is by entering competitions revolving around pitching business ideas. Entering these competitions can help you immensely as it gives you a financial source while allowing you to gain more publicity. Moreover, even if you don’t win, you still gain a lot of publicity. Either way, it’s a win for you and your business.

Ask Family and Friends

One of the best and risk-free places you can raise capital for your business is from your own house. That’s because, in most cases, the first investors to take an interest in your ideas usually are your parents, family, or close friends. And with your loved ones having small stakes, they’ll be more inclined to give you honest feedback about your business and promote it through word of mouth. It’s ideal if you make this your first port of call.

Whether you’ve seized on a lucrative business idea that you need funds for or already have operations running but want to take the next leap for your brand, the capital-raising tips mentioned can help you achieve that with minimal risks and huge returns.

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