However, it is still important to understand the nature and stage of your business first and then select a suitable tool to raise capital for your venture. The basic requirements that you need to fulfill are, having a unique business idea, a market that is scalable and sizable, an efficient management team, a unique business model and a strong value proposition to convince the investors for financing.
Now, your personal savings can be your first and one of the most important tools to raise capital. If you can afford to invest at least 25% to 50% from your own pocket, it’s like getting the 50% of the hard work done. Such ventures, where the owner shows his commitment and confidence in the business by bringing out money to the table, are more capable of attracting the investors. You think 25% is too much to afford? 10% can also do some magic for sure.
In case you do not have any personal savings, you can start by asking your family and friends those who can afford to take the risk of investing in a seed stage startup. Although this tool can be quite complicated at times and even end up hurting the relationships, but if you be careful while dealing with these near-and-dear investors, you can avoid any unwanted turmoil.
Another good source of fund can be the angel investors, who are, typically, wealthy individuals interested in supporting new innovations and development that can uplift the lifestyle of common men. Their main aim is to give financial support to your venture so that you can set your business off the ground and start gaining some traction.
The capital that the angel investors offer is, however, less than what is offered by the venture capitalists, the most important tools in capital raising. Venture capitalists are professional investors who pool money from the wealthy individuals and invest that money in highly-potential markets that ensure huge profits.
Finding the right venture capitalist is very important as every investor has his own stage and sector preferences. Some like to invest at the growth stage while others might be interested in the seed stage startups. Similarly, the various sectors like technology, energy, software, hospitality, etc. are also a deciding factor while choosing a venture capital firm.
There are many other tools to raise capital such as incubators, crowd funding, etc. through which you can raise capital for your venture. In any case, make sure you have a unique business plan that can easily make anyone fall for it.
Do share with me your experience with capital raising in the comment box given below.
For more information on capital raising, feel free to visit http://www.mergeralpha.com/. Merger Alpha is a common platform focused on the Southeast Asian markets that enables companies to find the right buyer, seller, investor or M&A targets. Let your company also be a part of the platform and quickly get access to the desired segment.