Raising Capital

Raising Capital

There are many ways to raise capital for a business. Some of these ways include: borrowing from family/friends, credit cards, equity financing, and kickstarter among many others.

Borrowing money from family and friends can be easy because they are people you are close to. Unless you know someone who is extremely wealthy, usually these loans will not be very large. As for the cost of these loans, they can range in cost from free to any range or rates determined. If things go bad with the business and loans are unable to be repaid, relationships with the friends and family can go ;bad. This is an unfortunate aspect of this kind of funding.

Getting a credit card is an easy way to obtain capital. It may not be the smartest way to go about things, but it can be cheap. Making minimum payments on the bill can be very cheap ($50 per month or so). Paying only the minimum payment per month can be risky especially if the business fails, you will have a large balance you owe. If the business succeeds, you could possibly get away with a risky way of funding your business cheaply.

Equity financing is also another way to fund a business. With this strategy, one exchanges money for fractional ownership of the business. This type of capital can usually be provided by venture capitalists or angel investors. A price you pay for this strategy is the business owner could lose part or total control over their business. The investors usually have a say in company decisions when they have their money in it.

Another way, which is newer is a website called “kickstarter”(www.kickstarter.com) . It is a website where people with ideas put their project on the website usually with a detailed description and video. The general public are the financers; anyone can add funds. The project owners set a deadline for the funds and a target amount. Neither kickstarter nor the financers have any ownership over the