Ten Ways to Raise Capital

1.  Dotcom IPO
This used to be the gold standard for getting rich with absolutely no product. Got a vague, but exciting idea for a Web site that can be easily monetized? Then sell the future worth of the company you haven’t even started yet, and which hasn’t made a single cent in revenue. To Wall Street! For millions! 

2. Venture Capital
This is probably the hardest kind of capital to get because VC people know how to turn a profit: buy low, sell high. And if you’re looking for investment, you’re at the “buy low” end of things. Venture capitalists like to deal with really creative people with limited sales know-how. If you believe in your product and are willing to share your beautiful Utopian enterprise with Gordon Gecko, you might have a shot at some VC money.

3. Friends, Family and Fools
If your mom has been telling you for years that you are a great inventor/entrepreneur, see if she’ll put her money where her mouth is. Really. If your mom isn’t prepared to invest in you, how likely is it that anyone else will?

4. Comercial Loans
Oh Big Banking, you took all that taxpayer money and bought up smaller banks who weren’t big enough to be too big to fail. Now it’s time to, at the risk of looking like a bleeding-heart-commie-liberal, share the wealth. Sadly, for small businesses, banks moved the goalposts for how you can get a loan. Unless you’re prepared to be responsible for the death of the rain forests, there’s a good chance you don’t even want to get into that paperwork at all.

5. Angel Investors
Does someone at your Chamber of Commerce drive a Maserati? When you Google them, do they show up on Advisory Boards of start-ups? Chances are, they have a decent net worth, and that they’re interested in investing in new business. Talk to them. Have your elevator pitch ready. Your company might be the next thing they want to invest in. Or it might not, but there’s only one way to find out.

6. Cash Out Your 401(k)
Not advised. Maybe if you’d done it in 2006 when it was worth something, but really … isn’t it currently valued at slightly less than the 1984 Renault Encore you had in college.

7. Government Bailout. There’s ARRA and TARP money out there — and you don’t have to be a giant, financially negligent corporation to get to it, either. The SBA have loan programs funded by TARP money.

8. Community Banks
Small banks are actually one of the smarter choices for small businesses. They’re local, and understand local politics and economics. They also want your business, assuming they think you’re going to be successful. While big banks are only interested in your ability to make payments, community banks are much more likely to look at your business as a whole, rather than your financial ratios.

9. Accounts Receivable Factoring
If you’ve been successful in growing your business, you might just be waiting for the checks to roll in. It’s okay to be impatient — call an accounts receivable clearing house, and they’ll buy that future income from you at a discount. Is it worth it to you to have 90 percent of your billings in your bank account now? If it is, this might be the way to go.

10. Business Retained Profits
Or personal assets. If you’ve been somewhat successful in your business venture, you might have a nice house you can mortgage, or your business might have enough retained profits to fund future growth with the application of a little strategy.

Some Things to Remember.

1. “Vegas, Baby!” is not in this list for a reason.
2. If you borrow from your 401(k) you can’t retire.
3. If you borrow from your company payroll tax trust account, you can go to jail.
4. People who invest in your company will want to have a say in how it’s being run.
5. Investors are not wealthy by accident, they’re usually pretty smart.
6. Bake sales work. On a small scale. On a large scale, you’d have to be the Girl Scouts to have it fund your organization.
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