How to Get Capital to Start a Business
If you have a great idea for a new business but are worried about how to secure funding to get your dream off the ground, you need to know your options. Banks and other lending institutions are often unwilling to loan money to new business ventures as they are seen as risky. Luckily, there are other ways to raise enough cash to help you open your doors as soon as possible.
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Instructions
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Prepare a written proposal to share with potential investors. Describe why your business, product or service is needed or how it will enhance customers' lives. Explain how your products or services are different from competitors', why this investor should fund your business, what you will use the funding for and how and when you will repay the loan.
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Use your own savings and investments first. Be willing to use your own money to start your business, as it will be difficult to raise 100 percent of the necessary start-up funds through other means. Sell stocks and bonds, real estate, life insurance policies or valuables to raise money.
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Ask friends and family to chip in. Borrow money from close associates who believe in and want to support your business. Assure lenders that you will pay them back by drawing up a formal contract that states how and when you will repay them. Suggest repaying these loans through profit sharing once your business gets off the ground.
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Seek out venture capital firms that invest in new businesses. Research these firms through your local chamber of commerce or online. Take your proposal to any meetings with the firm and present it to potential investors. Unless you can show that your vision is worth supporting, an investor won't be willing to donate his resources.
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Find angel investors. Angel investors are private investors who fund new businesses in exchange for part ownership; unlike venture capitalists, angels often want to provide mentorship as you start your business. Network with local Chamber of Commerce members and ask to be directed to potential angel investors. Give your proposal to parties who may be willing to pass along your ideas to a potential investor.
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