Funding a Startup

Funding a Startup

A large part of trying to take a brilliant idea and turn it into a fledging business venture is your ability to secure startup financing. Raising capital is one of the most fundamental activities of successfully developing a business. As many entrepreneurs discover very early on, raising capital is not easy and can be an ongoing struggle. It is key to conduct thorough research and be well informed regarding the different potential sources of money. If you plan effectively and well in advance, raising money for your business can be a more manageable experience.

It is important to remember that there are several different sources of money when looking for financing. Make sure to consider the pros and cons of all your options before making final decisions.

Authored by: Rohit Deedwania

Photo by: Luigi Diamanti

  • Personal Savings: A large majority of businesses are started with the initial source of capital coming primarily from personal savings and other forms of personal resources.
  • Friends and Relatives: Many new business ventures look to private sources of capital from those that they can trust, such as friends and family. Often, this money is loaned at a low interest rate, and sometimes, if you are fortunate enough, even interest free. This can be a very beneficial resource when starting a business.
  • Banks and Credit Unions: Banks and credit unions, the most common source of funding, will usually provide loans to low-risk business ventures. They want to ensure that they see a return on their investment and thus usually look for sound business proposals when determining whether to grant a loan.
  • Venture Capital Firms: These firms usually have large sums of money to invest along with a large knowledge of good business practices. The main drawback is that these firms usually only help expanding companies grow in exchange for equity or partial ownership.
  • Angel Investors: An angel investor is an affluent individual who provides financial backing for entrepreneurs. Often found among an entrepreneur’s family or friends, the capital they provide can be a one-time injection of seed money or ongoing support to carry the company through difficult times. Angel investors give more favorable terms than other lenders, as they are usually investing in the person rather than the viability of the business. Often times they are focused on helping a business succeed rather than trying to get a huge return on their investment.

For more information on how to find and approach these different sources of funding, be sure to give us a call. We would love to help you find the capital you need to help your business continue to grow.

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