Raising Capital for Your Startup Business

Most entrepreneurs come to us for help raising capital. Many want venture capital and we can certainly help raising money from VCs. However, 99% of companies are not a good fit with VCs. Venture capital is expensive and very difficult to get. Venture capitalists look for home runs – companies that will return ten times their money within 5 or less years. They will push you to take risks and spend money. They are not necessarily looking out for what is best for the business or the entrepreneur. Most entrepreneurs have a company that will earn them a comfortable return but that may not be the grand slam that VCs are looking for. The good news is that VCs are not the only source of capital.

So how do you raise the capital you need for your business?

Raising Startup Capital and Seed Capital

First, you need to raise startup capital to determine if your idea has “legs.” Your best bet is to use your personal assets. Also consider crowd funding sites like Kickstarter or RocketHub. They are good for raising capital of $5k to $25k to determine if you business is viable. Once you have established viability, consider applying for grants. Next, look to friends and family to raise capital of $50k to $200k. Many entrepreneurs raise this seed capital via convertible debt. If you don’t have paying customers after spending $200k you should consider whether you should be raising capital or whether you should be working on your value proposition. It is vital that your business achieve market traction in this phase. With professional investors, you will get better terms and have better results the further along the path to profitability you are.

Once you are up and running, don’t forget unconventional sources of capital – your vendors may be willing to extend you credit. Your customers may be willing to prepay for some products. Lease equipment instead of buying out right. Borrow or barter for equipment and office space. Call in favors.

Once you have an operating business, you can look to the SBA or bank for a loan or line of credit. Maybe you should establish a relationship with a factor in case you need to sell some receivables quickly. Maybe venture debt is a good choice for you. There are many, many sources of capital that most entrepreneurs just do not consider.

Plan to Raise Capital

Professional investors are just one way to raise capital. You need to have a financing plan for your business – raising equity, raising debt, and raising grant capital. Remember the old saying – everyone wants to give you money when you don’t need it and they are nowhere to be found when you do. Raising money has become a continuous process and not a discrete fund raising event. As we all know, running out of money is the primary reason that small businesses fail. If you plan well at the beginning you will not run out of money.

We have sold or raised more than $220M of capital for companies just like yours and we would like to help you develop a capital acquisition strategy and to raise the capital you need to allow your business to succeed.

To learn more about how Ampure Capital can help you raise the startup capital you need to get your business off the ground please fill out the contact form and or call us at (213) 537-3580.