Akinpelu Babatola Guest Writer
Every business, startup or otherwise, needs capital. This is the most fundamental requirement of all business operations. Yet, this is also one of the most challenging factors of entrepreneurship to acquire. After all, capital is used for procuring all other factors of production.
So, how do you raise capital for your startup? Let the Xpress train teach you how.
- Use your personal funds.
You are supposed to be your first point of contact in your quest for capital. Savings, personal assets, and your investments; these are all sources of funds. They will surely come in handy when your startup is trying to take off.
If you don’t have any personal savings, assets or investments to spare, all hope isn’t lost. Instead, consider selling your skills as a side gig. You could even take a mortgage on your home or get credit cards from your bank.
Self-financing the business can be difficult, but it comes with the benefit of little debt. And you also get to own all rights to your business.
- Source funds from friends and family
Friends and family are often our biggest supporters. So, it only makes sense that you ask for their help when you are launching your startup. They are even much easier to convince than banks when it comes to loans. This is also an excellent way to gather funds without incurring crippling debt from the get-go. Even if you are paying interests on the loan, the rates are usually much lower than those of banks. And paying off the debt is often more flexible.
- Open up to Angel Investors
Angel investors are defined by being worth over a million dollars or at least $200000 annual income. While most operate alone, they can also partner with others to create group funds. Their mode of operation doesn’t really matter to you, though.
What matters is that they can invest in your business; providing you with much-needed funds. Approach an angel investor with a detailed business plan and pitch your startup idea to them. Your chances of getting them to invest, go up if you can convince them of your business’ potential growth.
- Welcome a Venture Capitalist on board.
Venture capitalists are just like angel investors. The only difference is, they usually want to take over some aspects of management. In some situations, they end up owning some part of your business.
While this might seem bad at first, consider this; venture capitalists offer more than just funds. They also provide guidance and experience in business operations, particularly in the areas of financial management.
Most venture capitalists are usually just interested in promised interests. As long as their investments earn them returns, then you can continue to manage your business as so. If you want more guidance and involvement, consider a venture builder like the Xpress train instead. They are more invested in the “Build, Launch, and Grow” aspects of running a startup.
- Apply for a loan
Banks can be a great source of capital for your business purposes. They are usually happy to give out loans if you can meet their requirements.
You can take advantage of the SBA (Small Business Administration) loans. These already account for about 75% of small business financing.
The most common requirements for qualifying for such a loan are
- Excellent credit score
- Proof that the business generates impressive revenues each year.
- The company has been operating for at least 2 years.
Once you meet these requirements, then you qualify for such a loan.