Are you looking for financing for your new business venture? Maybe you even went on the TV show Dragons Den but left without funding? If you’ve been to Dragons Den and funding has been declined, you must be wondering why. What did the dragons tell you? You shouldn’t ignore their advice when they say your business is a stupid idea and would never make any money, believe them and move on. So many people come out of the cave thinking they know better and are pursuing their dream, but spend years wasting time on a business that will never succeed. But if the dragons liked the idea but just didn’t think it was investable because the return on their investment wouldn’t be worth it, you should still seek funding and keep your business dream alive.
Funding a business is a very important part of starting a new business. You have many options; You just have to know what to look for. Most people go to their bank first and try to get a bank loan. Bank loans may seem attractive since you don’t have to sacrifice ownership in the company, but their interest rates can be high and you could spend a long time paying off the debt. Plus with a bank loan, you have to pay it back even if the deal fails.
Another option available to you is equity financing, where you sell fractional ownership for cash. This can take the form of a business angel or a venture capitalist. With business angels you get the added benefit of advice and support from your investor. Angel investors are usually very successful themselves and have businesses similar to yours. They often save ailing companies from ruin and get them back on track.
Venture capital investors are another type of debt financing. Sometimes these types of investors become partners within the company, using their skills and experience to transform or help launch the business. Most of them take an active role, but some just provide the funds and let you run the business yourself. If the deal is successful, they typically get a higher return on their investment than, for example, interest rates on savings accounts. Because of this, venture capitalists are looking for companies to invest their money in. Equity financing is much more expensive when your business is successful, but much less when it fails.
Business grants are another option available to you and they could be just the type of funding you need. Grants are amounts of money that are made available to the economy and do not have to be repaid. However, scholarships generally come with conditions that must be met to ensure that you do not have to repay the scholarship. The problem with grants is that they’re hard to come by. They are provided by central, regional and local government, the European Union and a number of other national and local bodies. Most grants are awarded to limited liability companies, partnerships, and sole traders. Unfortunately, the location of your business is critical to being eligible for a grant.
Finding grants couldn’t be easier with the internet. There are many business angel companies that offer the opportunity to meet with investors. Some online sites have member areas where those looking for finance can post their business financing needs. Investors can also become a member and browse all investment opportunities and choose who and which company to invest their money with.