Are you searching for how to raise capital for a startup business you recently launched?
Entrepreneurs who don’t live near tech cities like silicon valley often find it difficult to raise capital for their startups.
To raise capital for a startup, entrepreneurs need to take advantage of effective channels such as digital crowdfunding platforms, social networking events, partnership opportunities, and building relationships with potential investors to achieve their funding goals.
Here in this article, we will guide you on how to raise capital for a startup with proven steps that work.
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How To Raise Capital For A Startup
Entrepreneurs can use the most effective methods and tools available to raise capital for a startup with these steps.
With digital crowdfunding platforms, entrepreneurs can easily raise money for a startup. Crowdfunding sites can connect your startup with potential investors and financial donors.
Entrepreneurs can take advantage of some crowdfunding platforms such as Gofundme, Fundable, Wefunder, Indiegogo, Crowdcube, Kickstarter, iFundWomen, CircleUp, SeedInvest, Patreon, Fundly, Chuffed, StartEngine, and StartSomeGood.
Entrepreneurs can raise money to grow or expand their startups through microloans provided for businesses by microfinance banks.
When you receive a microloan you repay it with an interest over a specific period. Generally, small businesses can receive microloans in small amounts, up to $50,000.
A partnership business is an agreement between two or more entities to operate a business to make a profit.
A partnership can take various forms and partners can benefit from one another. Most times larger businesses are often willing to partner with startups whose goals align.
Bootstrapping involves when an individual starts a company from personal finances or revenue generated from the new company.
Bootstrapping is the opposite of raising capital through capital firms or investors. Bootstrapping allows entrepreneurs to have total control over decision-making.
Angel investors provide funds for startups in exchange for a value of shares in the business. Angel investors often invest money in startups that can generate a higher rate of return.
Angel investing can be a more favorable method of raising money for a startup rather than a bank loan. Entrepreneurs can use crowdfunding tools to find angel investors.
Venture capitalists provide capital to startups that show a high growth potential. A venture capitalist will invest in a startup in exchange for shares in the stock market.
Startups willing to scale and commercialize their products often turn to venture capitalists for funding.
Launching a pre-sale before your product hits the market is a great way to generally improve sales. For example, a crypto company may launch a presale campaign project before its native token gets listed on an exchange.
A presale helps projects raise capital by building hype around the products and limiting the risks involved in the eventual launch of the project.
Accelerators and Incubators Programs
Accelerators and incubators both offer great ways for startups to grow their businesses.
An accelerator program is very competitive and it begins with an application that runs on a set schedule.
Startups are given a small seed investment, and access to a large mentorship network, in exchange for a small amount of shares.
An incubator program does not operate on a set schedule and can be sponsored by independent incubators, Venture capitalist firms, angel investors, government entities, major corporations, etc.
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How can I raise money for a small startup?
Have a strong business plan
Every startup company must have a business plan that shows the company’s objectives and how it plans to achieve its goals. However, a strong business plan can help a startup attract investors.
Grow your network connection
Meet and connect with potential investors by attending startup events in the city. Tech cities like silicon valley, London, addis ababa and lagos are good places to connect with potential businessmen and investors.
Never doubt the power of social media, entrepreneurs can leverage on the power of social media to meet with potential investors. Most companies have a social media presence on networks such as Facebook, twitter, Instagram and LinkedIn.
Crowdfund your ideas
In this digital age, entrepreneurs can raise capital for a startup through crowdfunding platforms such as kickstarter, Gofundme, Indiegogo, Fundable etc.