Raising Capital for Your New Startup

Raising Capital for Your New Business Venture

Starting a business is the ultimate dream job. You get to commandeer the ship rather than follow orders of higher ranked executives who can sometimes be irritating to work for. But in order to give your business idea a tangible form, you need capital to fuel costs associated with starting it, such as building the prototype, market R&D, and marketing.

The thing is, raising capital from business-savvy and highly experienced investors can be intimidating. These people don’t mess around when it comes to money, and one wrong word or sentence in your pitch can send them scurrying the other way. Here’s 4 tested and proven strategies and tips for novice entrepreneurs and business owners.

Start With People You Know In many cases, you don’t have to go far for the capital you need. But if family members, relatives, or friends don’t know what you’re up to, they might not be able to help you even if they want to. Inform them of your plans to start a business and ask for a loan or angel

investment. Presenting your business idea to close friends and family is a great way to practice and sharpen your sales pitch.

Consider Crowdfunding Crowdfunding websites like Kickstarter have picked up tremendous traffic over a relatively short period of time for the reason that it is a viable and effective source of investment. It’s the only platform where you can pitch to thousands of potential investors and partners without having to meet each one in person, which could be both expensive and time-consuming. What’s great about a crowdfunding campaign is that it is possible and common for people to invest in you without even taking equity in your company.

Peer-To-Peer Lending Platforms like Prosper enable entrepreneurs to ask for loans from other entrepreneurs for as much as $35,000. The catch is, the loan rates are variable and can go up to 34 percent APR for loans classified as a credit risk. If you are comfortable taking in debt, peer-to-peer lending is a recommended strategy for you.

Join Business Competitions Look for business events near your city or state. If you’ve see the reality TV show Shark Tank and thought or dreamt about pitching there as well, start off at local business competitions to gain brand exposure and connections. These events not only let you win prizes worth thousands of dollars but also connect with like-minded entrepreneurs and investors who are willing to help you grow your brand.

David Milberg is an entrepreneur and an investment banker from NYC.