5 Simple Ways To Raise Capital

Numerous sources are out there in the form of equity, debt, and grants or cash prizes

capital
(Image: istock.com/Alija)

Access to capital continues to be a stumbling block for many entrepreneurs. However, there is startup financing and working capital available to business owners in need of investing in inventory, facilities, and staff to establish a solid market presence and generate a profitable revenue stream. It probably goes without saying that the first source of capital for your business is you—personal savings or supplemental income from a side hustle—followed by money from friends and family. There also are several sources of capital out there in the form of equity, debt, and grants or cash prizes.

Here are a few simple ways to raise cash:

 

Angel Investors

 

It is possible to raise money from high net-worth individuals for your small business. Angels, because they’re investing their own money, have different incentives than VCs seeking a large exit strategy. Some may even be willing to structure their financing as debt as opposed to equity. The Pipeline Angels Network is a resource for women angels investing in women-owned businesses and non-binary femme entrepreneurs. AngelList is a website for connecting startups and angel investors.

 

Bank Loans or Other Debt

 

There are many types of small business lenders and debt products—banks, online lenders, credit card companies, and microcredit programs offering term loans, lines of credit, cash advances, invoice financing and more. OnDeck, for instance, is an online small business lender in the U.S., issuing over $5 billion in loans and trusted by over 50,000 small businesses. It provides funding in one business day but you must have at least $100,000 in annual revenue. Accion, a nonprofit microlender, is one of the best funding sources for founders with startups less than a year old.

 

Equity Crowdfunding

 

Since its launch in 2008, Indiegogo.com has helped individuals and business owners raise money online through it rewards-based crowdfunding platform. Now the fundraising website has teamed up with MicroVentures, an online venture capital enterprise. The two companies have launched an equity crowdfunding platform to allow individuals to invest in innovative startups. Another online platform is EquityNet.com.

 

Startup Competitions

 

One of the best ways to test your skill is to enter a startup competition. Of course, Black Enterprise has its own Elevator Pitch Competition at the upcoming Entrepreneurs Summit, awarding $10,000 to the first-place winner. But you can also eye other cash prizes across the nation like the FedEx Small Business Contest, which each year awards grants of $25,000. The Miller Lite Tap The Future Business Plan Competition provides a top prize at $200,000.

 

Service Component

 

Savvy entrepreneurs have a great opportunity to use a service side of the business to fund another, more capital intensive portion, according to the BusinessCollective, a virtual mentorship program launched by the Young Entrepreneurs Council. Many upfront costs come when you’re selling products (as opposed to services). Equipment or inventory purchases can precede revenue significantly. Services, on the other hand, can be profitable right away with very little upfront expense required.