Alfred Marshal has rightly said ‘Capital is that part of wealth, which is devoted to obtaining further wealth.”

Capital stands crucial for any business during all the stages, but there must be a roadmap to raise capital for launching a startup or business. 

An entrepreneur has to wonder how startups raise capital! And, it is an important aspect to cover and execute for launching a business successfully. 

In today’s blog post, we help budding business owners with exclusive tips and methods of raising capital.

So, let’s begin!

Getting the green signal to launch a business

 75% of the business ideas fail to execute because of inadequate capital.

Thinking about a new business venture is a brilliant idea. But as there is a saying, no idea comes free of cost. The dreamer or the business founder has to go through a complete roadmap with proper planning and execution for bringing the idea to life. 

Green Signal to launch a business

No business gets launched in a day. It takes months and years to bring an idea successfully into execution. Then, the business owner has to feed capital in the venture for the same!

Whether you want to launch a small business venture or a side-hustle, a proper method for raising capital needs to be designed to have a proper incoming cash flow. Capital is the business’s life; without the required capital, the business process shall remain ceased. 

So, getting the green signal for launching your new business venture is a must; and you get it by raising the proper funds or capital. 

Let’s discuss the best methods of raising capital for your new business venture. 

How do startups raise capital?

There are various ways that a startup can raise capital or funds for bringing the business idea to life. Here are the top seven helpful tips to successfully raise funds for your upcoming business venture. 

1. Investing Savings

Investing Savings

Well, one of the best ways to raise funds for your upcoming startup is by investing your savings. Launching a business is a big decision; it takes a few weeks to finalize whether or not the business idea would survive or execute efficiently because every business needs a roadmap with adequate capital. 

A person has two types of savings in life; personal savings and business savings (from previous or ongoing business). Generally, people utilize their personal or business savings for launching or starting a new venture. But, yes, it is a big decision that cannot be taken overnight. It needs to be discussed with the other family members, including your chartered accountant and financial experts, before considering your savings as a method for raising capital for your upcoming business venture. 

How to determine if an existing business has a good scope of profit or savings?

To understand the financial stability of any ongoing business or startup, one needs to check the business reports. Financial reports are pretty easy to view, download, or share with the help of online invoicing software. These online billing apps have various features, including financial reports that generate profit and loss statements, sales reports, purchase reports, tax reports, and invoice aging reports to know the business’s financial position. 

After analyzing the current business’s financial stability, the business owner can easily launch another business or a chain to the same business. 

2. Acquiring loans

The second and most popular method of raising capital for a new business venture is acquiring a loan. There are different types of loans offered by the banks, and financial institutions, for which acquiring any of them successfully can help raise funds for the new venture. 

a. Personal loan

A personal loan is acquired from the bank or any financial institution by submitting the legal documents and a guarantee. However, banks do require a guarantee against the loan. Therefore, it is part of the legal process. In addition, the bank has a specified personal loan interest rate that needs to be bear with the EMI while paying back. 

b. Gold loan

Many people launch their business by acquiring a loan on their gold ornaments or biscuits. It is one of the easiest ways to acquire a loan. The bank determines the weight and purity of the pledged gold and sanctions 80% of the gold value as a loan.

c. Business loan

There are various banks and financial institutions that offer business loans. However, while acquiring a business loan, there has to be a systematic business plan that needs to be submitted to the bank. If the plan seems good by the financial experts, the loan is sanctioned. Therefore, acquiring a business loan is difficult compared to other loans.

Apart from personal, business, and gold loans, there are many other ways to raise capital for an upcoming startup. For example, getting a car loan is also a great idea if the startup capital requirement is relatively less or moderate. Many banks offer car loans against the value of the car. 

Why Business Reports are Crucial for Startups?

3. Angel investor 

Angel Investor

Another popular way of raising capital for the startup is getting an angel investor. An angel investor either demands the ownership percentage in the business or a certain amount of interest against the loan amount. 

It is not easy to convince an angel investor for the startup because they have many offers. Hence, they determine each business idea carefully before demanding an ownership equity or loan interest. 

If you have an attractive business pitch with brilliant ideas and outcome opportunities, you can easily convince an angel investor or group of investors for a loan or capital. This might sound easy to you if you watch Shark Tank or similar shows. 

4. Crowdfunding 

Startup owners find crowdfunding as one of the best methods of raising capital. Here, many people offer some or a certain amount of loan for helping the startup to raise capital or funds. Altogether the amount offered by many people is collectively used as the capital for funding a startup. 

5. Selling shares or assets 

Selling Shares or Assets

Last but not least, people generally sell their shares, debentures, or any other assets for launching a new business or startup. If you have invested earlier in some good shares, it can be worth selling at an attractive price for raising funds for your new startup or business. 

Also Read: Technological Challenges Predicted for Startups in 2022

Pitch your plan right away!

Not sure if you have checked out these options earlier as one of the methods of raising capital for your upcoming venture. But, if you haven’t, you must consider these five helpful tips to raise funds. 

Also, here is a free tip for your business from our financial experts. Managing any startup becomes easy and cost-efficient if you have the best business management software or online invoicing software. It helps manage your business finances efficiently and stores all the business data on the cloud. 

Connect with Moon Invoice, online billing software for managing business invoices, estimates, and purchase orders from a single dashboard. Download 10+ business reports using our online invoicing app on various devices. 

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