Every business, in its entire lifecycle, must raise funds several times. Developing the business and taking it to the next level without funds or investment at regular intervals is impossible.
This is why most owners of companies constantly seek investors at every stage, even when it seems like they are already quite large and may not need any further investment or funding, but this is a myth.
Every single business, be it big or small, requires funding at every growth stage so that the business can grow, add more assets, cut down on liabilities, add more staff, an experiment in new markets, diversify and expand the business in new realms.
However the case may be, it is important to know the process to raise funds and the right ways to do so as it is the job of the owner(s) or the board of every company.
Fundraising for Businesses
Fundraising may seem like a taxing affair, and most companies are puzzled after raising funds from one option a few times. But it is to be noted that the companies or businesses do not have to deal with this alone.
Many kinds of fundraising assistance available in the market can help by pooling resources and finding many good investors for businesses. These companies act like brokers and help fund raising for non profits by linking investors to potential businesses.
They help meet with potential business investors such as VCs and Angels and can also assist in linking with government-based business finance institutions such as Small Business Administration and Private Money Lending Unions.
The method that these organizations or brokers adopt is by preparing startups and small businesses to get their basics right and making a sound case for investment from lenders:
- They help prepare a sound business plan with a detailed financial plan that can help Investors such as VCs and Angels see a potential business idea.
- They help create a pitch with the best highlights and solid sales points that can pique the attention of investors.
- They can help create a good financial plan so that lenders such as Private money lenders, Microloan lenders and Organisations such as SBA may like to lend to these businesses.
- They can also help in getting investors from popped funding methods such as crowdfunding.
Apart from these methods, the business can always use the owner’s money borrowed from their own funds or from friends or family in the early stages of setting up. Once there is considerable asset and turnover, the business will be eligible for a business loan at all credible nationalized and private banks.
Once the business is large enough, equity financing can be considered by selling equity to investors for investment in the company. Equity financing is much less risky, unlike debt financing, as the investor is the risk taker here but the promise of excellent returns for the business invested in has the potential for it.
By selling a portion of the equity stake to an investor, the business can use the investment to expand and grow into many markets. IPO is the last option for businesses to raise funds from the public once the business is global and needs further funding to drive international growth for the company.