This blog post originally appeared on Paul Saunders’ website.
The average entrepreneur’s first concern when starting a business is going to be how they are going to finance their idea. If their idea is going to need a relatively small investment, they may use their own funds, or they may turn to their family and friends to support them. If they are not able to do that, they can to go to a bank to get a business loan. Yet, for some that need more, or just for those who are not able to do any of those options, there are other methods to get financed.
One resource that is often overlooked is going to be your chamber of commerce, which will be able to give you information on where you can get local funding. Often they will send you to your local business development center, with some universities having them. These business centers can get you in contact with other entrepreneurs so that you can network, and meet other investors. They would be able to go over loan information, and even assist you in applying for it. They are going to love if you develop a local business in the area and are typically more than happy to assist you.
Angel investors are typically individuals looking to invest in companies they deem promising. These angels can invest money upwards of $10,000 in a business idea. To find angels, you can use Angel Capital Association. They have nationwide reach, with over 330 groups in their system. Not only do they assist with direct loans, but they will also, at times, even host events in order to provide networking opportunities. If the idea of taking money from someone online does not sound appealing, check your local community for angel groups.
Crowdfunding, as the name dictates is a source of funding that stems from a large group of people who give varying amounts of money to an idea. One crowdfunding resource is Kickstarter. Kickstarter is an excellent platform to utilize to fund a product, or a fleshed out idea. On Kickstarter, you will be able to set goals, and tiers that supporters are able to pledge to. The money they pledge is their investment to the product without expecting money in return. In order to get more funding though, certain campaigns will offer incentives to get interested parties to pay more. The product they are wanting to fund is going to a part of that. This is a good tool to use if you feel that the vast market needs the product you are trying to create. You will also need to advertise a lot if you use this platform. In order to expose the item to the market, social media is heavily relied on for this method of financing.
Venture Capital is for those who are looking to get over $1 million in funding. When looking at this option, know that you will need to be very prepared. Venture Capitalists require a very careful and detailed business plan. Yet, the benefits are that they will be able to fund larger quantities to businesses. Venture Capitalists are taking their clients money and investing in companies that they believe will be able to give them a high return relatively quickly. They will be looking to get 3-10 times what they gave within the following 5-7 years. One of the easiest ways to meet one would be through your contacts, whether that be other investors or entrepreneurs. If that is not an option, you can look to use the National Venture Capital Association to pitch your idea to.
Funding can be difficult to achieve, but by looking at what kind of company you are looking to create there will be resources for it. If one resource doesn’t work, try another. The first steps to building a business can be challenging, but your perseverance will pay out.