Businesses need capital to grow and be successful, whether it be for cash flow, wages, or just to source the materials to get off the ground. There are a number of ways you can raise capital for your business, with the most well-known being summarised below.
BANKS
Many businesses will often see banks as their first port of call if they want to raise finance. Banks can provide business loans, overdrafts and other forms of finance, and in return charge interest and expect regular repayments. However, they often require security and are unlikely to fund more unusual business ideas.
FRIENDS AND FAMILY
Friends and family members (or FFF – friends, family and fools) can often be called upon to raise a modest amount of capital for your business. They may even choose to invest, and will be repaid from profits when the business becomes a success. But, make sure that you thoroughly consider all the options. You don’t want the money to come between you!
BUSINESS ANGELS
Business angels provide the perfect middle-ground between friends and family members and venture capitalists. Offering a relatively modest amount of money (in business terms) in exchange for a share in the business, angel investors will bring their expertise and knowledge to the company as well as their funding. They look for businesses with high-growth potential to ensure the best possible return, and can be repaid depending on the profitability of the business.
VENTURE CAPITAL
Raising finance through venture capital is a viable option if your business is in the early to middle stages of development and you’re looking for a fairly high level of financing. Venture capital isn’t normally considered an option for start-up businesses, as you need to demonstrate a proven track record and can show the growth potential of your business. But venture capitalists, like business angels, can invaluable and bring with them their expertise and knowledge to help you succeed.
As you can see, there are options for all types of businesses looking to raise capital at all levels. If you decide to go for the investment option, check out
www.EntrepreneurInvestorNetwork.com.au, which will be able to connect you with a variety of angels and venture capitalists looking for their next big investment opportunity.
