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Raising Money for your Business Startup: Three Secrets of Overcoming the Odds and Winning Fresh Capital

Raising Money for your Business Startup: Three Secrets of Overcoming the Odds and Winning Fresh Capital

Raising money for an already existing business is difficult enough as it is, but things get even more complex when a business owner tries to raise money for a completely new startup. While startups are the economic engine growth of the United States, it can be very hard for business owners to find the gas that powers the engine.

However, there are a few secrets that entrepreneurs use to raise enough money to get past the start-up phase (these secrets can also work for already existing business looking for more money to fund an expansion). By following these three tricks, even first time business owners can beat the odds and get enough money to fund and grow their companies.

Network with an industry expert – It may be difficult to convince investors to invest in your company if they are not familiar with the industry, especially if your company is in the medical or technology field. If this is the case, try to network with an industry expert who already understands the industry and has connections in the field. If you convince this person that your startup will be successful, they can often refer you to more individuals in the industry. Also, depending on the reputation of the person, you may want to consider asking them to sit on your Board of Directors (or Advisors). This will add instant credibility to your firm.

Approach friends and families – While receiving investments from your friends and family may be nerve-wracking (how are your relationships affected if you fail?), your business may be well served by finding investors who trust you personally. The benefit here is that your friends and family already know and trust you—you can raise money based on the strength of your skills alone rather than just the business opportunity. If your personal relationships don’t trust you to with their money, who will?

Keep building the business – One of the best things you can do while trying to raise money is to keep focusing on running the business. Fund-raising is a full-time job, but it would be a huge mistake to let the business fall apart while you are trying to raise the money. Also, the business will continue to prove itself over time, so the longer you stay in business the better your chances are of raising money.

While raising money for your first time can be hard since you do not have a proven track record yet, these three secrets may get your foot in the door for funding. Approach families and friends as individuals who trust you and your abilities, and use industry experts to lend credibility and leadership to your company. Finally, keep managing and growing the business, and you will find yourself overcoming the odds against raising new capital.


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