As long as your business concept is strong
and you can make a case for both profitability and sustainability in this
economy, there are lots of savvy investors and banks looking for good
investments.
Here are four of the most popular traditional
funding methods:
1. Small business loans from Banks or other financial
institutions
A small business loan is my preferred
traditional funding method from banks or other financial institutions, because
the bank is neither seeking crazy-large returns on its investment nor a piece
of your business. Instead, the bank is concerned that you will be able to pay
back the loan.
2. Venture capital
Venture capitalists are investors or firms
who want to put their money and expertise into businesses and get sizable returns. They typically want both partial ownership and control in businesses
with large growth potential.
For some businesses, going with a VC is a
huge benefit. VC connections and knowledge can help a company to grow in ways
that sole owners wouldn’t be able to foster themselves.
If you choose to go this route, be prepared
for brutal feedback when presenting to venture capitalists. In my experience,
they do not mince words.
Ask for introductions to venture capitalists
from reputable sources. Most VCs tend to deal in specific areas of business,
such as manufacturing, retail or biotech.
3. Angel investors
Angel investors are individuals or networks
who want to put their money behind businesses that have the potential to make
good returns. They take a portion of the business in exchange for their
investment, while leaving the control with the business owner.
Angel investors are usually open to investing
in local and regional businesses as well as larger ventures.
Look online for angel-investor networks in
your area. Most host networking events and pitch sessions. You will have less
than five minutes to capture the interest of potential investors, so make sure
your pitch is tight.
4. Public Issue
If any company is going for a long term and
large amount of financing then such company may go for public issue. In public
issue company has to issue Equity share, Debentures, Bonds, etc
and ask for funding. Generally in India SEBI (Security Exchange Board of India)
is the regulatory body who give a proper way to go for public issue to arrange
funding. Company has to fulfill the norms of the SEBI.