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9 Expert Tips On Raising Startup Capital

So you’ve developed an awesome concept or product, you’ve tested the market, poured your heart and soul into it, now all you need is someone to give you the capital to get it to work. Here are 9 expert tips on raising startup capital.

#1 Build Trust

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The most valuable step in raising our Series A was building a good relationship with our investors, Index Ventures. For them, understanding who we are as a company is so important, and they never would have been bought in if they didn't know Spendesk and its vision thoroughly.

Contributors: Patrick Whatman from Spendesk

    #2 Find Investors

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    Don't expect the investor to pay off any personal loans or investment you've made in your start-up business. Investors expect their money to push the company forward not to pay off past debts.  Have a detailed plan on how any investment will be spent. For example, if the money is to expand marketing programs outline the specific tasks, how much those tasks will cost, who will be responsible and the expected results.

    Contributors: Dee Power from Profit Dynamics Inc.

    #3 Issue an ICO

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    So a burgeoning way to raise capital for businesses these days is to issue an ICO (or Initial Coin Offering), but a lot of companies that do that end up breaking securities laws and the founders end up in legal trouble. The leading solution for making an ICO that's legally compliant is a platform called Polymath and they've just launched their platform that makes it easy to create and issue security tokens--crypto coins that are compliant with SEC regulations for securities--in just a few minutes.

    Contributors: Trevor Longino from Polymath

    #4 Leverage balance transfer/0% introductory rate credit cards

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    Bootstrapping a small business is really tough, but many new entrepreneurs believe this is their only option because they have no business history. One option that has been viable that I've seen, and used myself, is to leverage your personal credit to apply for multiple balance transfer/0% introductory rate credit cards. Depending on your credit, you can get up to $150,000 in new credit lines and you can usually do a balance transfer of up to 90% of what you were approved for.

    Most people don't know that many banks allow you to do a balance transfer to your own (or business) checking account. It's similar to a cash advance, but it's not. Cash advances require you to make high-interest payments immediately whereas doing a balance transfer to yourself keeps the 0% introductory interest intact for the 12 to 18 months. There is usually a 3% balance transfer fee, but if you need, let's say $50,000, most people would be happy to pay $1,500 to access that amount of money interest-free for their first year.

    Contributors: Jon Sycamore from Jon Buys Utah Homes

    #5 Incentivize Early Supporters

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    Launching a crowdfunding campaign can reap huge benefits in not only raising capital but also in garnering interest from your target audience. To run a successful campaign, offer a number of attractive incentives that span a range of dollar amounts. To allow time for your campaign to reach an expansive audience, don't limit the number of lower-dollar contribution rewards too strictly. Consider hosting an in-person event with a raffle and preliminary prizes if your target market is local, or host a live event online if your audience is more spread out. By engaging with your target market before your official business launch, you increase the depth of your market research and thereby your odds of a successful launch.

    Contributors: Rebecca Graham from Best Company

    #6 Read Real Reviews Regarding Lenders

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    Your greatest educational resources in this process of raising capital are startup owners who were once in your position! When you're financially ready to apply for a business loan, compare the reputations of several lenders by reading reviews from current or past borrowers. Look for mentions of positive customer service and clear terms and conditions, and watch out for red flags like unauthorized sharing of contact information to third parties. By doing your research ahead of time, you'll be more likely to acquire your desired loan type and amount from a trustworthy company. 

    Contributors: Rebecca Graham from Best Company

    #8 Family and friends

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    The easiest way to get the startup capital for a business is to borrow from your family members, relatives or friends. Since these people know you well, it will be easy to convince them than any other sources to lend you the amount you require. Moreover, these people might claim a considerably lower rate of interest from you for the sum you borrow from them.

    Contributors: Andrei Vasilescu from DontPayFull 

    #9 Take Bank loans

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    The most common way to gather the initial fund to start any business is to take business loans from any bank or financial organization. You have to submit your complete business plan to the bank authorities and convince them explaining how much profitable return you might get in near future. If convinced with your business plan, banks will lend you the start up amount.

    Contributors: Andrei Vasilescu from DontPayFull 

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    Written by Zak Parker

    Journalist, writer, musician, professional procrastinator. I'll add more here later.

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