Raising Capital for Business | Best Guide for Your Startup

If you are a business owner, raising capital for business is something you are deeply concerned with.

You know that capital is the lifeblood of any prospering and growing business. Yet, in a business environment where cash is king, not many entrepreneurs seem to have enough of it.

 And it is worth noting that one irony is that the creativity and innovation that entrepreneurs and startup owners often show in starting and developing their businesses tend to fall apart when it comes to the capital formation and business planning process.

There is no doubt that without the appropriate resources your startup company won’t be able to create, develop and sustain the breakthroughs, it needs to establish a long-lasting and valuable presence in the competitive market.

Funding is the lifeline that your startup company needs to develop both the structures and infrastructure needed to support and foster growth. Capital gives you the freedom and luxury to be innovative and creative in your tactics and more selective in your partnerships. This will allow your startup company to prosper.

And, more importantly, for startups, capital allows you to create and influence market conditions, as opposed to responding to them. Note that with almost -record amounts of venture capital (VC) dollars available to startup businesses but a likely economic downturn on the horizon, many business founders and CEOs have some important decisions to make this year.

You probably know that many startup hotbeds in the US, such as Silicon Valley, Boston, Austin, and New York City, are now becoming increasingly differentiated because of their “infrastructure” (accelerators, incubators, and angel networks, etc.). And this supports and promotes the creation and expansion of new businesses.

Note that this robust social infrastructure makes raising early-stage capital in these markets considerably easier than in many other cities. However, even if you do not live in a startup hotbed, there are many ways to raise the startup capital you need for your company, as long as you have a promising business idea.

Here are some sources you can tap into if you are looking to raise early-stage capital for your startup business.

Raising Capital for Business from Friends and Family

Many professional VC investors in the US will tell you that they only invest in startup companies if they have trust and confidence in the management team.  And note that this maxim is especially crucial in early-stage companies. This is because Murphy’s Law rules and the startup company’s success usually depends on the ability of its hardworking, smart, dedicated, resilient, and innovative founders to react to new challenges in the market and constantly adapt in order to achieve success.

However, as your family and friends are well aware of your skills and talents, they will be more likely to support you regardless of what you would like to do. Friends and family are the ones who know about your potential and will be more inclined to give you money. This is why they are an excellent source for raising startup capital.


There are many types of crowdfunding to get your startup company off the ground. However, you will have to choose which one is the most suitable for your business, like rewards or equity-based crowdfunding.  Crowdfunding is a great way to gather startup capital for your business. You can even use it to raise funding to finance the manufacturing of a new technology on a large scale.

Keep in mind that crowdfunding platforms, such as Kickstarter, are often set up for individuals to pitch their innovative business ideas to a community of investors or individuals willing to support their business ideas or cause.

Angel Investment for Startup Capital

Did you know that angel investors are individuals with a huge amount of capital? These people are willing to invest the capital on over the edge business ideas. It is worth noting that reaching out to angel investors is as simple as reaching the right individuals in the right areas.

However, to be successful, you have to do it the correct way. You can easily network with these people through engaging with them on various social media platforms, LinkedIn groups, and even through blog posts on websites.

Sometimes, angel investors come together in groups in order to scrutinize various business proposals and then select the best candidate to invest in.

Raise Early-Stage Capital through Bank Loans

Banking institutions in the US provide financial support on loans to people and startup owners who approach them with a feasible and sound business plan. Note that your business plan has to be well structured enough to convey details, such as the modus operandi, profit forecasts and estimated time of maturity, etc.

And the financial provision of most banks is available in two forms. These are working capital loan and funding, which are great ways to raise startup capital. Typically, working capital loan is the loan amount needed to run a complete cycle of sales revenue-generating operations.

The bank will usually decide the limit by hypothecating debtors and stocks. In contrast, funding from the bank usually involves the usual process of sharing your business plan and various valuation details, as well as the project report, based on which the loan amount is sanctioned.

Government Contracts or Grants

Government grants and contracts are great for raising startup capital – if you are able to get them. Basically, it is free capital that can help pay for product development and may, in some cases, stretch to revenue generation. And this makes it a perfect source for early-stage capital.  

The best thing is that you do not need to give up any equity in your business, and the government does not usually care if your startup company is in Silicon Valley or Death Valley. However, in most cases, government funding is quite time-consuming to pursue and very difficult to obtain.

Why Raise Capital Online

Most people know that raising startup capital and selling stock is often the most important challenge for entrepreneurs and business owners of all stages. The good news is that with the passage of the JOBS Act in 2012 and the creation of many funding portals, entrepreneurs and startup owners can now leverage the internet in order to broadcast their offering.

 However, you have to direct prospective investors to the SEC-registered funding portal on which your shares are being offered.

Here are some benefits of raising early-stage capital online.

Set up is Simple

If you’re an operating company and have all your financials and other paperwork organized, you will be able to get live on multiple online fundraising platforms within just a few weeks.

Develop Brand Loyalty

Note that one of the most vital groups that would like to invest in your startup company if you gave them a chance is your customers. And keep in mind that there’s no better way to develop brand loyalty as well as create loyal brand ambassadors than to allow your customers to own equity in your company. Customers who are financially incentivized for your business success will be more helpful and valuable than you may imagine.

Final Thoughts on Raising Capital for Business

While raising early-stage capital for startup business takes some effort, it is certainly possible. If you’ve identified an excellent opportunity and have a well-thought-out and comprehensive business plan, one of the above strategies can well work for you.