5 Ways to Raise Money for Your Business (With or Without Investors)
Fundraising has become mainstream, thanks to shows like Shark Tank that glamorize the pitch process. But those who raise money from investors are actually in the minority. Most small businesses raise money on their own terms and don't have to give away part of their company to anyone else. Feeling intimidated at the idea of asking for money? Or even paying yourself? Let's talk it out! As part of our collaboration Office Depot, we're here to share a quick recap of what our Selfmade students learned this week about funding their business ideas.
Here are five ways to raise money for your business:
- Bootstrapping: This is when an entrepreneur builds a company with their personal savings or the operating revenues of the new company. If you pursue this route, you can bring on hires by offering equity in the company if you can't immediately pay a salary. You'll also want to start seeking out advisors in the beginning — specifically people with different skill sets than yours. Two to three advisors is a solid place to start in your first couple of years. Popular Bootstrapped Brands: Patagonia, Spanx, GoPro
- Grants: This is money you don't have to pay back that helps fund your business. Popular Small Business Grants: iFundWomen, The Red Backpack Fund, FB Small Biz, Eileen Fischer, Tory Burch, FedEx, and more here.
- Loans: This is money you eventually have to pay back, usually with an additional interest payment. The longer you're in business, and the more profitable balance sheets you have to show, the lower your interest rate will be for a small business loan. Shop around for several quotes so you can ensure you're getting the best interest rate if you go this route. One type of loan to know is a cash advance, which a bank gives you up front to pay out your vendors, etc., and that you'll pay back over time, plus interest.
- Crowdfunding: If you've ever been on Kickstarter or Patreon, then you probably have a good understanding of how crowdfunding works — by raising small amounts of money from a large number of people. Popular Crowdfunded Brands: Brooklinen, Allbirds, PopSocket
- Angel Investments & Venture Capital: With both of these funding options, you'll have to agree to give the investors a certain amount of equity in the company. AngelList is a great resource if you're considering raising money from angel investors. To pitch venture capital firms, you need a referral and an incredibly tight pitch deck. This is for businesses with a clear path to a billion dollars in revenue. Once your biz is in with VC, your only "exit" strategy is to get acquired or go public.
Still not sure where to start? Sometimes jotting it all down and making a plan can make it feel more real. Office Depot OfficeMax can help you organize & save time with a suite of business services & solutions to help you accomplish more. Make a good first impression with business cards & build the business pitch of your dreams with custom presentations. With Office Depot OfficeMax it's never been easier for your name and ideas to appear in print.
Head to Office Depot's Selfmade page to check out even more amazing business resources (and discounts!) to help you accomplish more on your entrepreneurial journey. These offers are available for a limited time only, so be sure to take advantage of all this goodness while supplies last.
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Theresa Gonzalez is a content creator based in San Francisco and the author of Sunday Sews. She's a lover of all things design and spends most of her days momming her little one Matilda.