5 Ways to Raise Capital

Financing

 Rather than give you a big book on this….. Let’s just cut out all the FAT and get you money.

Here are 5 ways to raise capital for your projects.

  1. Crowdfunding
  2. Social Media
  3. Peer Peer Lending
  4. Venture Capital
  5. Angel Investors

Crowdfunding

Kickstarter, Indiegogo, and Kiva are all great sites to raise money for your projects..

Here is how crowdfunding works. You register at the websites, upload your project, and if people want to fund you they have the opportunity to do that there. In return for funds, in most cases, you will give a reward.

So if you were raising $15,000 for a book you wrote, then you would simply give different variations of the book to people as rewards for their donations. Here are some examples.

  • $15 donation = reward: PDF copy of the book
  • $25 donation = reward: Softback copy of the book
  • $35 donation = reward: Author Signed copy of the book
  • $50 donation = reward: Author Signed Hard Cover copy of the book

Now, this is just one example. In some cases, you might just want to raise capital for a vacation or maybe surgery. Make sure that you check the guidelines of each site to see what the requirements of each site are

Tim Ferris wrote a great article about raising $100,000 using Kickstarter. I think the Article is called Hijacking Kickstarter and you can Google it and see exactly how they used it.

Social Media

Now this is a very proven way to raise money. I raised thousands upon thousands of dollars using Facebook. Now if your thing isn’t Facebook, you may want to think about using Linked In or other social media sites. I prefer Facebook because this is a very fast way to raise capital and you are already friends with your fellow members so they already know you.

I use a technique called prizing. Prizing is where you get people excited about your project. You want to get people so excited that they want to be a part of it. Then you need to follow through with a call to action.

Here are the simple steps to follow:

  • Make posts on your home page of Facebook that you have a new project coming up and that you are very excited about it.
  •  Send direct Facebook messages to every single person you are friends with that you have a project coming up.
  •  Post regular posts on your home page about what stage you are in about your project. (minimum twice per week) and keep people apprised of your status as you go.
  • Send direct Facebook messages to every single person you are friends with about your launch dates. (or something special about your project)
  • Post a post on your home page that you may be willing to let people in on your project. (this is the prizing part. You want people to feel like they may get an opportunity to be a part of something). This will spark an interest thought in their brain.
  • Send direct Facebook messages to every single person you are friends that you might be letting people come in on your project and to let you know if they are interested.
  • Finally, the ones that didn’t respond or inquire on how they can be a part of this project…. Send them a direct message through Facebook that you are looking for investors to come in on the project even if it’s only a couple hundred bucks. (now, even though you are only asking them to come in with a few hundred dollars… most people will come in with a couple of thousand dollars.)

That is the overall of how to raise money using social media. You want to spark interest, then you want to prize your project, then you want to ask the direct question for friends to invest (this is a definite call to action)

Peer Peer Lending

There are sites that have thousands of average joe investors out there looking to invest their money for simple interest on the money lent. The two main sites are Lending Club.com, Prosper.com.. (www.peerpeerlending.com)

These sites are the equivalent to hard money loans. They are done on a peer to peer basis. Meaning you post a request and thousands of people come to invest in your project for a higher interest rate. The benefit is that most banks won’t give you these types of loans but other peers will.

For a Prosper loan, you post a request that talks about your project and thousands of investors all over the world put their money in and invest together to fund your project.

These sites lend on a Credit Score basis. So if you have 600 FICA you are probably not going to get approved. But if you have a 680 FICA or better you will get approved. Once they determine your FICA Score they will tell you how much you can borrow and what the interest rate is.

Once you create your project and you are up and running it may take as little as 30 days to bring in the money.

For a Lending Club loan, they are an industrial bank and will approve you instantly or it may take a few days. You will have the money within a week or so. You do not need to create a profile request as you do with Prosper.com

Venture Capital

Where can you find Venture Capital money?   This seems like such a daunting task but it’s not. You can simply Google “venture capital phoenix” or “venture capital (your location” and you will see sites that have lists of venture capital companies in your local area.

Check these sites, find someone on the list, and contact them to make an appointment. It’s that simple. When you go into meet with them make sure you have all your ducks in a row and your presentation ready to go.

Here are some examples of sites that list venture capital companies.

  • http://www.caycon.com/arizona-venture-capital.php
  • http://www.gaebler.com/California-venture-capital-firms.htm

Here is a list of the Top 100 VC firms nationwide.

  •  http://www.entrepreneur.com/vc100/stage/early.html

As you can see… a simple Google search brings out thousands of VC companies for you to request money from.

Getting VC capital is easier than you think. If you would like assistance on getting capital, you can contact us through the contact page and we’ll talk further about your goals.

Angel Investors

An Angel Investor is an investor who typically has a lot of money and invests in startup companies or early development companies. These investors usually take equity in the company versus taking an interest rate.

Angel investors are good for smaller amounts of capital versus a huge some from a venture capital company. This is typically the next step up after borrowing from friends and family.

There are angel groups out there that combine a bunch of angel investors together to fund a project which limit the exposure of risk to one individual investor

Again you can Google angel investors but here is a good location to start with.

  • https://angel.co/
  • http://www.fundingpost.com/angelgroup/angel-group-profile.asp?fund=114 (Arizona)

You may also want to become a member of an incubator which gives you access office space and in a lot of cases, access to angel investors.

An incubator office is where several people come together to work on ideas and launch them from the incubator and often the incubators will have social gatherings with angel investors so investors can see new ideas and get in on the ground floor.

In looking for angels to target, don’t forget that choosing an angel investor is a great opportunity to gain an advisor. So do your research. The best investor for your start-up will be the one who can contribute significant experience, knowledge, and networking opportunities, as well as the cash you need to grow your business.