6 Ways To Raise Capital For Your Online Business

ways to raise capital for online business startup funding options company financing methods

You might have great ideas for an online business and are wondering where you are going to find the capital to make your business ownership dreams come true. Your savings are low to no existent and the idea of running an online business maybe drifting away. Well, don’t give up on your great ideas yet, because there are various ways that you can find capital and start your online business

Here are some useful ways that you can make your business become a reality. 

1. Apply For A Loan 

There are many ways of raising capital and technology has made the process easy. Lending institutions have gone digital and made their products easily accessible through apps and websites. A huge percentage of financing of new online business has been done through business loans, credit cards, and lines of credit. Many small business loans are being offered at favorable rates. However, the rules of lending will differ with every lender. Just make sure you have all the necessary documentation required for you to qualify for a loan. Most lenders check personal information and credit score. If you meet all requirements, then you will find funding for your online business. 

2. Ask The Help Of Friends And Family 

You could also raise capital through friends and family. You can have a fundraising event at your home or book a venue and invite all your friends and loved ones for the event. Involve only the friends and family members who you strongly believe will support you, understand your plans and are also clear about the risks associated with your business. After doing that, have a sound business plan to present to them and be realistic in the amount of money required and be honest in your intentions. 

Remember to agree on the form your funding will take to avoid misunderstanding. If the money is a loan, agree with your friends and loved one on the payment plan. If they are funding for equity in your company have that clear and on paper as well. Finally, if they are just supporting you as a friend or family that is good but let that be clear as well because they could be thinking it is a loan they are giving you and will, therefore, be expecting payment. A strain on your relationships is the last thing you need during your journey as an entrepreneur. 

3. Find An Angel Investor 

Angel investors are accredited people with a net worth of more than $1 million or an annual income exceeding $200,000. Most angel investors operate solo but in some instances, they will partner with other angel investors to form a fund. These people can be a great source of capital for your online business. Ensure that you have a solid business plan and have a great pitch ready to sell your idea. You can find these angel investors through various resources online such as the Angel Capital Association and many others. Such platforms allow you to seek out, meet and arrange pitches to your potential angel investors. 

4. Venture Capitalists 

Most venture capitalists love investing in more mature businesses compared to the ones invested by angel investors. In some instances, you find venture capitalists wanting to be more involved in the daily running of operations. If your business is a scalable and cash-flow positive company then a venture capitalist will fund you. Your pitch will be instrumental in obtaining your funding. You need to clearly and briefly state why the investor should consider your business. It is not an easy thing to do but many online businesses have done it and succeeded. 

5. Find The Capital Yourself 

Many aspiring business owners today have realized that they will have to self- fund which is commonly known as bootstrapping, their projects for a while until more opportunities present themselves or until the business is stable. You can do this in various ways. You could decide to use your savings along with zero interest credit cards and even leveraging your assets. If you strongly believe in your new business idea and have refused to accept failure as an option, then you shouldn’t have qualms about investing your own money into the business. This move will even make any potential investors more willing and comfortable to step in knowing that you believe in the business yourself. After investing with your own money in your online business, just ensure that you focus on profitability. 

6. Go Into Partnership With Someone 

Sometimes you might not have this money required or have very little. A partnership with someone could be the only way to fund your business. The other party might have the money and resources but the idea is yours. You can put your proposal on the table offering them a share of your business. Make sure your partner believes in the business too and have the terms of your partnership clearly stated in document form. This is to avoid any future misunderstandings if your partner wants out or you need to dissolve it. 

Funding your business comes with its challenges. You have many options for financing it but oftentimes getting these options to work is a challenge. You must keep your spirits up even when one method doesn't work out. Keep demonstrating due diligence, resourcefulness, and persistence and in time you will raise the capital that you need. 

In some instances, you will be forced to work with what you have and slowly grow your online business to levels where further funding can be acquired easily. Most investors want to see the real figures with evidence that a business is making a profit and shows a lot of promise. Sometimes you will need to get your business to this level to grow to the next level. 

Get The Capital You Need To Drive Forward 

The key lesson here is that you have many options for financing your business. Don’t get discouraged if one doesn’t work out. By demonstrating due diligence and being resourceful and persistent, you can raise the capital you need.

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