Raising capital for a new business

I have been asked countless time by clients and readers about raising capital for a new business. This article will highlight some of the ways of raising capital that has worked for other people.

The first source of capital should be the entrepreneur. If you are earning a salary or doing some kind of business, then save a portion of your income to finance your new venture. If you do not have savings or the amount saved is insufficient then go for sweat capital.

This simply means you put your labour, be it physical or mental, into the business and do not ask for payment in return but rather plough the expected payment into the business.

The next source of capital is your family and friends. When you articulate your business idea to a relative or friend they may be willing to fund it even though formal financiers are shunning you. This kind of funding is usually based on your character as well as having relatives or friends who can part with the kind of money you need.

In the last decade or so many online angel and venture capital sites have sprung up. To get funding from this source you will need to have a good business plan and a bit of internet savvy. The online funders can be very specific about the business sector they support and the amount of funding they can provide. Three of the online sources of business capital are KIVA, MYC4 and Bid Network.

KIVA whose web address is www.kiva.org is an online lender that provides small loans to borrowers through a network of field partners. The borrower applies through the field partner, which is usually a microfinance institution. It is the field partner that collects money from KIVA and passes on to the borrower and also receives repayments from the borrower.

MYC4 is another online source of capital that is focused on working with businesses in sub Saharan Africa. The business model of MYC4 is somewhat similar to that of KIVA but the loan amounts are much larger ranging from Euro10,00 to Euro10,000. It is possible to apply for a loan from MYC4 using their website located at www.myc4.com

Bid Network whose web address is www.bidnetwork.org is another online source of funding for new businesses and those which are expanding. Bid network only supports entrepreneurs with a clear business plan but they are very versatile regarding the amount of money entrepreneurs can get from $1,000 to as high as $1,000,000.

If you have a really brilliant new business idea or want to expand an existing business, the internet could provide the money you need provided you have the patience to develop a credible business plan.

James Abola is a business and money coach. Email: [email protected]