Few Alternatives to Venture Capital Investment When Starting a Business

Few Alternatives to Venture Capital Investment When Starting a Business

Are you planning to start a business and require venture capital investment? You need to know that venture capital is the funding that is got from a venture capitalist. You will want to understand that venture capital cannot be obtained easily. The venture capitalists are investors who will invest their money in your business, only when they are convinced that your firm can repay the money.

You will want to know that only a few entrepreneurs have been capable to convince these investors to provide the finances for their business. If you are planning to fund your firm with venture capital, then you would want to know that, your chances are not very high. This is when; you will want to make use of alternatives which can help you fund your business.

Below are some venture capital funding alternatives which you would want to consider.

Make your own money

You will want to make your money. When you do not require a high amount to start your firm, then you would want to fund your own finances. This is possible by selling your property or house. If you have some property that is lying unused for a long time or got some money in the bank, then you would want to make use of it, to fund your firm.

You can also try to save some money every month from your regular work for your venture. Some businessmen have two jobs to enable them to operate their business. That helps them to save money and lead a decent life. This is one of the best alternatives to fund your own business. This way, you are not dependant on a venture capitalist, who will most likely not help you, unless they are strongly convinced.

Private equity fund

Venture capital fund and private equity fund are almost the same. Venture capital fund is used for startups. Private equity fund is used for firms that require money for development. When you have started your firm and need money for further development, you can make use of private equity fund.

Family and friends

You can take help from family and friends. Family is your parents and partner. You can convince them to lend you some money for your firm. Usually they give you without asking you too many questions. However, you will want to know that, when the time comes for you to repay, you will need to come up with strong answers, if you cannot pay back the money.

Borrowing from friends should be done with care. While some of them might give you money without charging interests, some will charge interest. You would want to get everything in writing so that you do not get into any legal issues. It is safer to borrow money from your partner or parents and avoid your friends in money related matters.

Angel investors

Angle capitalists are not the same as venture capitalist. Angel investors provide advice on your business and even mentor you, which are a good thing, when you are first timer. Angel investors mostly provide longer investment terms (7-8 years) when compared to venture capitalists (3-6 years).

The above were some alternates to venture capital funds. You would want to decide and choose the funding source depending on your requirements.