Raising Capital on Your Own Terms
Small Businesses are one of the main contributors to the success of the economy because of the amount of jobs created. It becomes a challenge for entrepreneurs to grow a business and provide jobs when there is not enough capital to operate with. At the beginning stage of a company, funding and raising capital becomes a substantial factor. Many startups and businesses start by using their own assets from investments and loans, however it takes them a while to become profitable due to the lack of funding.
Here are some ways a business owner can raise capital on their own terms:
Set Goals: Establishing goals and a vision is the first step to be successful in raising capital. You must have a numerical goal on how much money you are trying to raise. It will give a vision on where you are headed and allow anyone on your business will have clear what the fundraising goal is. It is important to establish how much control you want in the business when you are setting your goals, as well as identifying if you are looking to sell your business in the future.
Identifying Investors: There are multiple sources of funding from outside investors. It is up to you to identify what kind of investor you would like to work with; especially if your main goal is to maintain control of the business. Do your research on who you are looking to work with, private equity groups, venture capitalists or individual investors. Some might offer a substantial amount of funding with you not having most of the control on the business, and some might offer less funding with you owning most of the company.
Make Your Offer: Once you have identified what type of investors you are looking to work with, you should consider what you are offering to these investors. Some of these are how much equity are you giving them, revenue-based debt, straight debt, convertible debt, and agreements for future equity.
Staying on Track: After you have made your offer to an investor, it is crucial to stay on track with your goals and your vision. Knowing where you want your business to go and executing on that vision will help you stay on track with outside investors.
For this article we made a brief overview on Jenny Kassan’s book “Raise Capital on Your Own Terms” How to Fund Your Business Without Selling Your Soul
