How to Raise Capital

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In order for a business to raise capital, they first need to know how much money they need, what type of lending institution they want to work with, and whether or not they are prepared to give up partial ownership of the company. Look for capital six months before it is needed with help from the co-founder of a business advisory company in this free video on raising capital.

Part of the Video Series: Starting a Business
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Video Transcript

In order to raise capital, you need to first know how much money do you need, what type of lending institution do you want to work with, are you prepared to give up ownership of the company, partial ownership of the company, or are you just trying to borrow money straight out. Those types of things you need to come to terms with before you really go looking for a source of cash. You need to know when you're going to need the money. Typically you need to start looking for it six months to a year before you really need it, because depending on how long it takes for you to find somebody and what their process is, the entire gestation period for the process could be up to a year, so plan ahead. If you're in a business and you're anticipating a growth spurt, you need to think about that, and again, hopefully you're doing a cash flow analysis and that sort of thing that will tell you six months out or a year out where your cash situation's going to be and if you're going to need an influx of cash to finance capital expenditures or a ramp up or whatever, you're going to see that far enough out that you can start to process and contact the people that you want to work with. You need to make sure that when you're looking for capital you need to be looking for people that you think you can work with longterm. There's some people you're going to want to borrow money from and others you're not going to want to borrow money from, and you need to sort that out because you're not just talking about a month or a two month ordeal here, you're talking two to seven years probably. So whoever you get involved with make sure it's somebody you trust and you respect and that you can go the distance with.

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