How to secure investment in a small business

by Darwin on January 28, 2019

If you are an entrepreneur just setting up your first business there is a lot to sort out. From finding premises, to hiring staff and marketing, your to do list will be massive. When you add in a myriad of other factors like managing your cashflow, buying stock and dealing with HR, then you will have plenty to get on with. One area that many budding entrepreneurs need to focus on first is gaining the investment needed to get the business started. Without the investment capital in place, how will you pay for staff, premises, stock and marketing material? 

Effective ways to secure investment 

As a small business owner, you may need ways of raising money through investment but not be sure how to go about it. That is especially relevant if you have not set up a business before or have never needed to source external capital to fund a venture. 

If you need some helpful ideas about how to source funding for your small business, the below advice should help.

  • Raid your piggy bank – for many small business owners, the first port of call for investment capital is their own bank account. While this might not seem that great a choice, it does have the advantage of keeping equity within the business and not having to bring any external investors on-board. This may not be possible if the costs involved are too high but if you can afford to do so it is probably the best and cheapest way to proceed.
  • Bank loan – if you need more money than you have in your savings or simply do not want to use your own cash, then a bank loan could be the answer. Many banks offer small business loans to help you get going. That does not mean they are easy to access though! The issue for many small businesses is that many banks are unwilling to lend money to a new or unproven enterprise. If you can persuade your local branch manager with a well-written business plan though, it could be an avenue worth pursuing. 
  • Friends or family – one source of capital could be investment from your friends and family. Whether they provide a simple loan or request a stake in the business for their investment, it can often be a simple and quick way of raising the money you need. Although this may not be something you feel able to do, asking family or friends for money can sometimes be the best option.
  • Crowdfunding – advances in online technology have seen changes in the way that investment can be sourced. One fairly recent development is that of crowdfunding – think of well-known names like Kickstarter to get an idea of this method. In simple terms, this presents a way of asking for funding from people for your new business venture. Investors then give an amount towards the total sought in return for either a gift or some equity in the business. While this can be a more accessible way to generate money than a bank loan for example, it can lead to lots of individual investors to keep in mind.
  • Peer to peer lending – many people confuse crowdfunding with peer to peer lending, but they are two different things. With peer to peer lending, you source online loans from investors through platforms like Funding Circle. These loans give you the capital needed to get started and you then pay them back with interest at a later date. In effect, they are like getting a bank loan but are much easier to access.

Venture capital firms are a smart move 

Although the above forms of investment for small business all have their merits, gaining funding through a venture capital firm is the route that many take. This not only gives access to the money needed but also expert guidance from the venture capital organization itself. This expert advice is worth its weight in gold and will give you the head start that is needed to succeed. 

US Venture Partners is one such organization that has been helping small businesses to succeed for many years. Operating primarily in the healthcare information tech, e-commerce, cybersecurity and enterprise software sectors, it has built up a superb reputation. Typical investment levels range from $5 million to $10 million over a 10-year period which is very handy for businesses needing a major injection of capital to get going. 

Find investment for your small business like a pro 

If you are a new entrepreneur, then finding the right information around business can be tricky. If you are in need of some tips to source investment like a pro, then the above advice should help. 

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