How to Raise Entrepreneurial Capital
There are several avenues that are available to entrepreneurs when it comes to funding for their business ideas. The nature of the startup would usually depend on where and who an entrepreneur can go to for funding even though there are some ideas that would be welcome in any platform. Below are a few that can be used to get funding for your next big business idea.
Savings: If you already have savings, or money put aside somewhere, this is the advisable method of funding your entrepreneurial startup. This is because money that you work hard to put into a savings fund is not subject to any strings and conditions, except those you choose to impose on yourself to help you focus and streamline your personal funding.
Angel Investors: Angel investors are usually individuals who invest in businesses for a lot of reasons. Mostly they are looking for healthy returns from the business while helping the new entrepreneurs get their business out of the ground at the same time. There is no definite amount that an entrepreneur can expect to receive from an angel investor as it depends a lot on the individual.
The Center for Venture Research at the University of New Hampshire said in a report that most ‘angels’ invest close to home. Therefore, if you are thinking of an angel investor for your business, look around your community or your state. This does not mean that there are no angels that invest further from home.
Venture Capitalist: This could either be an individual or a firm that provides what is known as venture capital. Venture capital is money which is used to fund a new business. This money is provided by an outside investor (much like an angel investor) and could also be used for troubled businesses. The money is usually provided in exchange for an equity stake in the business so it is not a loan.
Microfinance: More entrepreneurs are turning to microfinance as a means of funding their business startups. Although there are banks that offer microfinance, you are more likely to get funding for your business from a financial institution that focuses on microfinance. There are also a number of nonprofit microfinance institutions that specialize in lending to entrepreneurs.
Government: The government has a lot of loan schemes for small and medium businesses and as an entrepreneur, you might be able to benefit from these programs. However, most government loans are restricted to a particular sector, depending on the government.
Crowdsourcing: This has become a lot more prominent in recent times because of the many Dot com businesses that have benefited from crowd-sourced funding. There are several websites such as , , and , which focus on helping entrepreneurs to raise funds.
These are just a few sources that you can utilize as an entrepreneur to fund your business ideas. The most recommended though is either to bootstrap or to get loans from family and friends. Failing that, the options above should help.