How to Raise Money for a Business?

For most people, this is a daunting aspect, but if your business has real potential, it may be less challenging than you think. If you have the will to succeed and invest your own time and talent, you are likely to find that others believe in you too, and that’s especially true when you are professional in your approach.

Here are a few pointers on how to raise money for a business, as well as a quick guide to two of the most common types of capital you can raise.



Create an investment deck – Preparing an investment deck may sound complicated, but it’s actually just a PowerPoint or similar document that you prepare to show to potential investors. There’s no reason to have an investment deck prepared professionally as long as it looks as though you did, is clear and simple, contains all the pertinent information needed to provide a quick overview of your business plan, and makes it easy for investors to act upon.



Prepare investment documents that are compliant with all state and federal regulations. The documents that are appropriate will be entirely dependent upon the type of transaction you are pursuing. Seeking funding from accredited investors requires much less investment information than is the case if you are raising funds from non-accredited investors, or what would be required for a registered offering. You may want to engage the services of a corporate finance consultant for this.



Begin your offering, supported by the legal standards for the type of transaction that you are pursuing. For example, if you are seeking funding in an accredited investor round, you must make certain that you have identified candidates that either have a net worth over $1 million individually or together with a spouse (excluding the value of their primary residence; earned more than $200,000 (or $300,000 together with their spouse) in each of the previous two years and expects to do the same for the current year; or is a director, executive officer or general partner of the proposed business. The principal idea is that they can bear and are cognizant of the risk that is involved in their investment.



You can also raise funds using equity crowdfunding, Regulation A offerings and other ways. An experienced consultant can help you figure out how to proceed.

Most people raise capital either through providing equity in the company or by assuming debt. Equity can be raised from friends, family and colleagues; via an equity crowdfunding campaign targeting those who are already enthusiastic about your product or service; or a Direct Public Offering. If you are not interested in having others involved in your company’s operations or in having outsiders holding shares, the other option is to ask those same family, friends and colleagues for a loan, or to take out a loan from a financial institution. Small business loans are widely available and represent a significant majority of the financing used for startups. Terms will differ based on the institution and the financial standing of your business.