How To Raise Capital For Your Startup?

Although you always want to build a successful career with the passion of creating distinct values, money is the life-blood of your company. If you want to be successful, you need to talk a lot about money and it is even an unavoidable thing.

Robert Kiyosaki has impressed the importance of financial intelligence several times in his famous book “Rich Dad Poor Dad.” If you want to earn a lot of money without working too hard, you must be financially intelligent. For those who want to start their own business, raising capital is the first issue they have to handle. If you haven’t yet decided your startup, then you can explore 100+ small business ideas in really less investment.

So, how to raise capital for your startup? Scroll down to know more.

1. Sell products in advance

Selling products or services in advance to raise capital is often ignored, though it is an effective way. It doesn’t lie. You know Adam Khoo – a famous Singaporean millionaire, who was successful with the idea of organizing a mobile dance floor. When he organized the first event, he used money from ticket sales to pay for musical instrument hiring fees and employee’s remuneration before the event happened. This way, he could start up his business model without money beforehand.

2. Negotiate with providers

You can negotiate with your providers to postpone the payment until you receive money from your customers. Sometimes, the provider may require you a mortgage because you are a new company. If possible, avoid giving them mortgages.

In most cases, people prefer negotiating with a person who they know clearly; therefore, please contact them directly to explain what you are trading and how you would like them to assist you. Try to capture their hearts and mind with your passion and integrity.

3. Do outside business activities

Business owners can consider doing outside business activities as an effective way for capital mobilization. Michael Dell, the founder of Dell Computer Corporation, is one of the youngest billionaires in America. When he was 12 years old, he washed dishes for a Chinese restaurant to earn money. Before starting his company, he sold subscriptions to the Houston Post and earned about $18,000. He used this amount of money to buy an old computer, repaired, resold them, and gradually expanded his business.

4. Sell properties

Sometimes, we may not realize simple ways to raise capital that is exposed in front of us.

To open Apple Inc., Steve Wozniak sold his HP 65 with the price of $500, though he received only $250 from the buyer. Steve Jobs sold his Volkswagen with a price of $1,500. However, two weeks later, the machine was broken, and he had to pay half of the money for preparing.

Although it is not so easy to sell your loving assets at a low price, starting a business is much more important for an entrepreneur.

5. Use credit card

This is not a good way for those who need long-term loans, but it is useful when you start building your business model. For instance, you can use your credit card to buy goods and sell them to pre-ordering customers.

This is a useful way when you don’t have enough money for your startup. However, this should be a secret; don’t tell anyone that you use your credit card to make a purchase.

6. Find angle investors

Angel investors are those who have a large amount of money but don’t want to create a savings account just because of the low-interest rate. The main advantage of finding an angel investor is that you will have full powers to make a decision and don’t need to ask for too many people’s opinions. Angel investors may also bring you customers and business opportunities.

If the startup gained some momentum with some minimum viable product (MVP) then you can reach to venture capital firms for the advanced stages of funding.

7. Start a crowdfunding campaign

A crowdfunding agency plays an intermediary role between community sponsors and projects which need capital. Kickstarter and Indiegogo are two overwhelming examples. However, before choosing a crowdfunding agency, you need to browse the agreement carefully to understand your benefits and responsibilities.

Some agencies may require you to have a certain amount of initial fixed capital, while others want to earn a commission basing on the amount of attracted capital. They may also charge you a fee for the fund raised. Therefore, research each agency’s policies well before deciding to choose this way for fundraising or raise capital for your startup.

8. Win a competition

If you are lucky enough, you can raise capital by winning a start-up competition. Tran Tuan Anh, the founder of ticketbox.vn, started his business model after participating in Startup Weekend. First, he developed an app that helps people participating in the same event find each other and won the 2011 startup idea prize. This prize has paved the way for him to participate in the ASEAN Demo event organized by IDG and brought him a chance to get access to a lot of domestic and foreign investors.

9. Raise capital from employees

You can also raise capital from your employees. For example, if you build a new hospital and hire a lot of doctors and nurses. You can ask them to submit a certain amount of money based on their situation, and this amount of money will be paid back when they resign. Moreover, they will receive an amount of money which is equivalent to the bank’s interest rate monthly.

This is an effective way you can do with less effort. Both your employees and you will benefit from this agreement. You can raise capital for your business, while your employees will get an extra amount of money each month.

Besides, you can borrow money from your family members, friends, or strategic investors who have the same directions with you. There are many intelligent and effective ways to raise capital for your startup rather than waiting until you have enough money. At that time, you may be financially independent, but there are no opportunities.

Once the management of funding is done and product is developed and gained some momentum then you can expand the business into other territories as well but there are some basic business growth strategies which should be adopted before going global.

Image credit- Canva