Originally Published Nov. 7, 2017
At times, it may seem like finding money to fund your business is as difficult as striking it rich from the lotto, but never fear, there are many ways to accomplish this feat. When you have a startup or a small/medium business that you are looking to get off the ground, there are several ways to draw in some additional cash and gain funding for small business.
Pitch Competitions
These things are popping up all over the place and they are happening with intense frequency. I have a friend who won two in one week, no joke. These competitions allow you to receive earnings ranging anywhere from $1,000 to $650,000.
Grants
Like the above, these surface often, but you have to do a little more research to track them down. The beauty of a grant is, unlike the options below, you don’t have to pay it back; and because you are a minority, you already qualify for a number of them.
Loans
They can come directly from the bank or from
friends or family members, although I would be a little cautious with the latter. I’ve seen some relationships end very badly over this exchange. You must pay this money back and it usually comes with an interest rate attached.Crowdfunding
A lot of entrepreneurs use this process to test the market and see if there’s a demand. They will host their project with several rewards attached and if the audience bites, they know they’ve got something. Some popular platforms include Indiegogo and Kickstarter.
Angel Investment
This is when a high
net-worth individual decides to spend their own money to help you fund your dreams. In some cases, angels are institutional investors or former CEOs of companies with extra cash to invest. Either way, they are a good option to tap into.Venture Capital
This investment consists of you selling shares, i.e., an ownership stake in the company. These deals have been known to be structured in many different ways. They can show up as a Convertible Note or SAFE, both forms of debt set to convert to equity. (Click the
links to learn why this works in your favor). The ultimate goal for the investor is for your company to get an equity/priced round. That is when they can actually start to make a return on their investment.Equity Crowdfunding
This is becoming a more common way of raising money in the venture community, especially among African Americans. Entrepreneurs are finding it harder and harder to raise from investors so they look to their peers to invest.
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