How to Raise Capital

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Capital

At some point your company will have to raise capital. You may need start up capital or capital to expand. This article will guide you on how to raise the capital you need.

Look at your personal savings and assets first to raise the capital you need. Often you can find things you do not need and can sell to raise capital. Using your personal savings and assets is the cheapest way of raising capital.

Start with family and friends. They know you and want to support you. Even though they are your family and friends be businesslike when you approach them and formalize your agreement with a contract.

Try local banks. Bank financing is often hard to get especially for new businesses but try local banks who may be more willing to lend to new businesses. If you have an existing bank relationship try that bank first.

Look for angel investors. Angel investors are private investors who invest in small businesses and seek better returns than traditional investments such as mutual funds. Ask your accountant or attorney if they know any one who would be interesting in investing in your company.

Consider government grants. The government often has grant money for small business that you can apply for. There may be a lot of competition for grant money for certain programs and a lot of paperwork.

Tips & Warnings

  • Look for capital before you need it. Establish lines of credits or relationships with potential partners on an ongoing basis. When the need for capital arises you will have a source to go to.
  • Be careful about giving up too much of company if you take on equity partners. If you are not prepared to give up some control of your company seek other options.

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