Capital funding is money that lenders and equity holders provide to a business. The money is used for operating capital, but investors and equity holders expect to see a return on investment through interest, dividends, and stock appreciation. Entire companies exist with the sole intention of providing capital funding to businesses, some in specific industries and others not. Some companies also provide certain types of funding such as short-term financing or financing during certain stages of the business process.
Whether your business is brand new or you’ve been running the show for quite some time, an infusion of cash is always welcome. Your best bet is to work with a venture capitalist–a person who provides capital to startup ventures or supports small businesses that don’t have public funding to expand. Winning this type of funding isn’t exactly easy, but we have a few helpful tips to help you through the process.
Have a Business Plan in Place
You need to have something going if you want to get funding–not just a cool idea. You should carry relevant experience, maintain strong connections, and have a clear vision for where your business is going in the near future. Write a formal business plan and have a creative, engaging pitch. If you don’t know how to do this, hire help. It will be worth it.
Be Clear About What You Want
What do you need the money for? How do you plan to allocate it? Investors want to know how their money is going to be used and how it will benefit your business. This is important because investors are concerned about when their investment will be returned–the sooner (and bigger!), the better.
Apply with VCs Who Understand Your Industry
It’s ideal when you can find a venture capitalist who has already shown interest in investing in companies like yours. This is a good indicator that they are familiar with what you do and know what your business needs to grow.
Explain Your Uniqueness
Venture capitalists appreciate businesses that are unique. It’s hard to ask for an investment when your business is like any other–and has competition on every corner. Explain what makes your company different–better.
Show Your Dedication
Investors get turned off when they feel that a business owner wants them to take the risk. Show that you are in this business 110 percent. It takes more than passion to run a business. Be sure to detail where you see your business in the next few years and how you plan to get there. You don’t need to ramble on about your own credentials, either. Instead, let your understanding of the market, your customers and your employees shine through.