One of the greatest hurdles toward starting a business is finding the capital. Even if you have a world-changing idea, without the right capital and investment, you cannot hope to make it a reality. In fact, most people with great ideas struggle to make it big in the world because they don’t get the right amount of investment or the right people to invest in a venture. So, the question that troubles most new entrepreneurs is - how to secure investors. If you are among those who don’t know how to find the right investors, read on.
Applying for a loan
This is perhaps one of the most common ways to find investment for your new venture. Most financial institutions such as banks offer loans if you approach them with a sound business plan that offers realistic returns. Applying for a loan can be easy or a bit cumbersome depending on the amount of the loan and other terms and conditions. However, it is one of the easiest ways to get investors.
How to attract Angel Investors
Angel investors are people offering to invest in promising start-up companies in exchange for a share in the business, usually in the form of equity or royalties. A good way to secure investment from angel investors is to approach them directly with a solid business plan. Several online resources can help you find angel investors for your business. Sometimes your local chamber of commerce can help you find suitable angel investors.
What are Venture Capitalists
Another way to secure investment is to approach venture capitalists. A venture provides capital to start-up ventures and also supports small companies without access to equity markets to expand. Although they are similar to angel investors, the main difference is that venture capitalists can invest a large amount of money in your business. But an angel investor usually invests small chunks of money.
These days, there are several communities, both online and offline, which offer investment to businesses. You can find many such communities on social media platforms such as Facebook, Reddit, Twitter, and more. You can join some of the communities that suit your business model and ask for investment.
Crowdfunding is yet another way to raise capital for your business. It is the practice of financing a project or venture by raising money from a large number of people. The fundraising is usually done via the internet. There are several crowdfunding sites and communities you can approach for funding. It is a great source of alternative finance for those looking to raise capital.
Apart from all the above sources, you can always approach affinity groups (such as industry, geography, past colleagues, problem sets, and even friends in certain cases). Another source is high-net-worth individuals who might be willing to fund your project. Additionally, there are certain government funding sources available for certain kinds of businesses. Furthermore, certain universities might also be great sources of funding if your venture can benefit them.
As you can see, securing investors is not an impossible task. However, before you approach any investor, you should have prepared a detailed business plan that will show your potential investor how investing money in your project can be beneficial. If you can’t show them the benefits, they will not loosen their purses. So, you should get everything worked out well in your business plan so they can see how the funds will be utilised. A profitable venture backed up by a solid plan will definitely attract the cream of investors.