It is not a surprising thing that, in this period, you want to establish a small business to gain an additional income. However, opening a business requires money, but some people might not possess that fortune. If you are one of them, you better consider getting an investment.
That said, a question that comes to your mind must be how to get an investment for your business. Also, who would be the best candidate for an investor? To give you revelation, here are ways to acquire investment for your small business.
Also Read: Online Business Ideas that You Must Try
Friends, Relatives, or Family
If we are talking about small business, the best way to gain an investment is arguably through your friends, relatives, or family. In so doing, there are two ways to get an investment, which are a loan or an investment fund.
When it comes to a loan, it sounds more personal and intimate. Basically, a loan is an amount of capital you require to establish your business. Put simply, you get the money and you pay back at a particular date. Whether you want to add interests depends on the deal.
Meanwhile, an investment fund sounds more professional, showing that you are being truly serious and calculative about your business. That said, it does not mean that a loan makes you less serious. In investment funds, the person who invests in your business will get a certain share.
Private Investors
Private investors are more professional investors than the foregoing. We can categorize private investors into angel investors and venture capitalists.
Angel investors are people who are so rich that you would not need any other investor if you get one. However, angel investors tend to be more calculative in spending their money. Thus, you have to make a good pitch on why they should invest in you, or at least show them that your business has value.
Venture capitalists are those who make an investment using other people’s money. Normally, they raise capital through crowdfunding and, subsequently, use the raised capital to invest in several businesses. Usually, venture capitalists only want to invest if the business is already well-established.
Crowdfunding
In this current digital age, getting investment through crowdfunding is easier than ever, but the competition is also tighter than ever. Based on the type, we can classify crowdfunding into two, that being reward-based and donation-based respectively.
As its name, reward-based crowdfunding requires you to hand a certain reward to your investors. The rewards can be in the form of anything such as discounts, additional products, and so forth. So long as the reward is ‘acceptable’, then investors will invest in your business.
On the other hand, donation-based crowdfunding is, as the name refers to, a donation. Usually, this type of crowdfunding gathers a smaller amount of funding from each investor. However, these investors will most likely donate if your business potentially results in a specific impact.
