Receiving investment for your startup is halfway to living your passion. There are four common ways of receiving investment for your business plan:
- Angel investments
- Venture Capitals
All of the methods mentioned above are readily available for someone who has a plan or is already executing their business. To help you decide which type of funding would be most beneficial for you, Luke Sandler New York gives a brief introduction to what these investments are and how do they work.
A business already in action that needs funds for expansion or growth may seek an angel investor. These are generally individuals or institutions looking for small companies with enormous potential for growth.
Funds can be raised against stake-holdings being sold to the angel company. Both parties should agree to the terms and willingly enter the agreement. Generally, this type of funding is made for a short time and promise high returns to the investors. But the share in stakes is commonly substantial.
Another easy mode of capital raising is getting a loan from a bank. Banks are always looking out for such opportunities. Banks levy a commendable rate of interest and the term of the loan may range between ten to twenty-five years, or even more in some cases.
You can always approach a venture capitalist for funds against company shares. The investor would analyze the risks involved. Generally, investments made by a VC firm are unsecured and does not charge any rate of interest.
The agreement would involve a period of funding and a sum to be returned to the investor at the end of the term. The funds are not released at once but rather in steps. An advisor like, Luke Sandler can help you with your search. The investors also participate in the managerial decisions of the company.
This method offers a long term solution with minimal or no risk involved. People use this method to raise funds for literally anything and everything. You can choose to provide your company shares against a small amount paid by some individuals.
Recently crowdfunding has gained popularity as many start-up ventures choose to crowdfund for development and production purpose. There is no liability of the raiser towards the donor. But this method is very uncertain. Unless your fundraising cause is really unique or extraordinarily appealing, it is very likely that you would end up with little or no funds at all.
To begin with fundraising, you need to be sure of having an excellent plan. You need to make sure the following, to start with, your fundraising efforts:
- Make a short and refined layout.
- Explain your product and how does it solve a problem
- The potential for growth
- Marketing model
- Business proposition
- What do you offer against capital?
- What are the risks involved?
- Predictions and outcomes
Once you have laid out all these clearly in a clean format, you are good to go. Hope this information helps you. Good luck with your capital search.