When one is establishing a start-up enterprise, the biggest concern or head ache to the proprietors is how to raise the capital. Every starting enterprise required that one has a sizable amount of money to invest so that they can sustain the business before it can begin to deliver any profits which are then plowed back to make the business grow. Each step of your business development requires that you have some capital to finance it. Even though it is more challenging to get funding nowadays, it is not an endeavor that is impossible if you are a bit creative, have patience, persistence, and above all, you can talk to people. Let us look at some of the ways that an individual can raise some capital for a startup.
Even though this mode of fundraising is in its infancy, crowd funding has come up as one of the fastest and emerging techniques which have proved to be effective in raising the money that is required to finance a start up enterprise. As the name already depicts, this is the type of funding, where a project is funded by the personal funds that are contributed by those individuals who are involved in the project.
The starting point in this particular mode of funding is the development of a proposal. You will come up with an idea, and then you will present it to the people whom you think will have an interest in it and who will be able to invest in it. The contributors will have the liberty to choose how much they want to invest in the idea. Due to its effectiveness crowd funding has gained prominence in recent times.
This is a particular type of funding where you will have your business funded by an angel investor who is mostly affluent people and persons of means who are always eager to invest in a start-up business. In this method of funding, an investor can give you a convertible debt which is in the form of a bond, and it usually matures after ten years. The bond can then be converted into shares of that particular company, or they can be termed as cash value.
Some of the start ups which have been financed this way and made it to the top include skype, twitter, google and even Facebook. Examples of angle funders include golden seed and tech coast angels to name but a few.
Another way that you can finance your start-up is going to venture capital. The venture capitalists are individuals or business organizations that usually invest in start-ups that have a high potential for returns. Even though there is a high risk that is involved, the VCs are more than prepared to counter the loss. Mostly they do invest in enterprises within the fields of technology, software, and biotechnology. So if your business falls here, it is about time you go to them.
Taking a bank loan is one of the most common ways that one can finance a start up. One down side of this is that the bank will always demand a guarantee before issuing you with financing.