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. You may consider some financing options to help you achieve the right capital for your dream business. There are various ways to finance your business to help you achieve the right capital for your business such as venture capital, commercial lenders, small business administration, accounts receivable specialist, friends, and family funding, and crowdfunding.
Venture capital is often misunderstood so many start-up companies do not want to venture in capital companies for failing to invest in risky ventures or new ventures. There are many people thinking that venture capitalist are just like sharks or predators. But this is not really the case. With the professional responsibility of reducing risk as much as possible, venture capitalism involves venture capitalists are business people who are charged with investing people’s money. Venture capitalists do not take more risk more than what is required or needed just to produce the risk or return ratios that are asked by the sources of their capital. 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. Venture capital must focus on newer markets and products in order to increase projection of sales 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 areas, potential investors are occasionally meeting just to hear business 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. Local banks apply Small Business Administration loans or SBA loans, that usually require one-third of the capital supplied by the new business owner. You can also try considering engaging with accredited investor leads through crowdfunding, a form of encouraging online investors to invest on your business. To learn more about this innovative business financing, feel free to visit our website.
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