Starting up a business is not an easy task as it involves careful study and analysis of the market you want to venture with. One of the hardest things to do is how to find the capital for your business. But there are financing options you can try to consider to do so. In order to help your business gain the capital it needs, there are different types of investment and lending available such as venture capital, commercial lenders, small business administration, accounts receivable specialist, friends and family funding, and crowdfunding.
There are many start-up companies that do not want to venture in capital companies for failing to invest in risky ventures or new ventures because venture capital is often misunderstood. Many people consider venture capitalists as predators just wanting some deals. But this is not really the case. Business people who are charged with investing people’s money are called venture capitalists, and they have a professional responsibility of reducing risk as much as possible. Venture capitalists are not taking more risk than what is necessary in order to produce the return or risk ratios that the sources of their capital ask of them. You have to understand though that venture capital cannot afford to invest in start-up businesses unless there is a rare combination of market opportunity, product opportunity, and proven management. Within a span of three years, a venture capital investment should have a reasonable chance of producing a tenfold increase in business value. It must focus on newer markets and products which can reasonably increase sales projection by huge multiples in just a short period of time.
“Private placement” companies are also capable of funding small investors apart from venture capital. In some places, there are groups of potential investors who occasionally meet just to hear proposals. To find these wealthy investors, it is good communicating with government agencies, business incubators, business development centers and similar organizations that are usually tied up with different communities in your area. You can turn to your local Small Business Development Center (SBDC) that is directly associated with your local community college. Commercial lenders are good for funding small businesses, but banks are less likely to invest in startup businesses. SBA or Small Business Administration loans are usually applied by local banks which are normally requiring one-third of the capital supplied by the new business owner. You can also engage in crowdfunding, a form of encouraging online investors to invest in your business, and this can be achieved by considering purchasing accredited investor leads. For more information on how to generate accredited investor leads, feel free to view our website anytime.