TOP 10 ways to raise investment capital for startups

In the entrepreneurial journey, calling for investment capital is an important part and a significant challenge for new entrepreneurs. In this article, 1C Vietnam will share with businesses the 10 most effective ways to call for investment capital today. Refer now!

1. Use own capital

Most business activities today need to use their own capital. This could be from personal savings, private assets or profits from previous businesses.

Advantage:

• There is no need to share shares or control with other investors.
• Create independence and autonomy in business management.

Defect:

• Own capital is limited and not enough to meet the development needs of the business.
• The time to accumulate and save enough capital necessary for business activities is often quite long.

2. Bank loan

When calling for investment capital, borrowing capital from banks is one of the popular and effective methods, especially for large enterprises with reliable business operations.

Advantage:

• Access capital quickly and flexibly.
• Usually have lower interest rates than other methods of raising capital.

Defect:

• It is necessary to have operational history and collateral to ensure debt repayment in accordance with bank regulations.
• For start-up businesses, borrowing capital from banks is often difficult due to lack of operating history and credit.

3. Call on family and friends to contribute capital to the business

Calling for startup investment capital from family and friends to contribute business capital is applied by many small and medium-sized enterprises. Although it has its own advantages and disadvantages, calling for capital from family and friends to contribute capital is still a useful method to start a business, helping businesses have more capital and encouragement from others. Dear.

Advantage:

• Loan amounts and repayment times for relatives and friends are often quite flexible.

Defect:

• An unsuccessful business can affect relationships with family and friends.
• Borrowing money from relatives can create pressure and tension in the relationship.

4. Call for capital from customers and partners

In addition to capital from relatives, businesses can also take advantage of relationships with partners and customers to borrow investment capital.

Advantage:

• How to call for investors from customers and partners to help expand business networks and create new strategic relationships.
• Compared to seeking capital from other sources, calling for capital from customers and partners can minimize costs and legal procedures.

Defect:

• The capital raising process can affect business relationships if not managed carefully.
• Businesses are likely to be dependent on customers and partners to maintain business operations, creating risks in the event they withdraw or change strategy.

5. Call for capital through programs for startups

If you are confident with your presentation and communication skills, administrators can participate in capital raising programs. Administrators need to prepare carefully and learn thoroughly about capital calling programs to increase the likelihood of success.

Currently, there are many capital raising programs for Startups, such as Shark Tank Vietnam, TechCrunch Disrupt, Startup Viet Challenge, Startup World Cup and Google for Startups.

Advantage:

• The programs have the participation of experts in the fields of investment, business, and technology, helping businesses receive support and advice from experienced people.
• Participate in programs calling for investment capital to help increase brand awareness and attract potential customers.

Defect:

• Programs often have fierce competition from other businesses, requiring businesses to have careful preparation and capacity to stand out.
• Businesses face pressure when presenting to investors and experts in many different fields.

6. Call for startup investment capital from the community

Calling for startup investment capital from the community through crowdfunding is an attractive method. In particular, channels calling for investment capital , websites and applications such as Kickstarter, Indiegogo, or GoFundMe are important platforms for businesses to access capital.

Advantage:

• Crowdfunding allows businesses to reach a large number of supporters from all over the world.
• Anyone can participate in support, from individuals to organizations and potential investors.

Defect:

• Competition for crowdfunding and attention can be high, especially on popular platforms like Kickstarter or Indiegogo.
• Managing relationships with a large number of investors from the community can require a lot of time and effort.

7. Call for capital through organizations and government agencies

Calling for capital through organizations and government agencies is an important way for businesses to have the additional capital needed to develop. Government agencies often offer financial support programs, including preferential loans or direct investments in businesses.

Advantage:

• Government agencies often provide low-interest loans, no-interest loans or flexible repayment terms, helping businesses save on capital costs.
• Investment support programs help businesses access investment capital from other investors, opening up greater development opportunities.

Defect:

• Some financial support programs from government agencies may require complex procedures and long processing times, requiring businesses to have patience and perseverance.
• Competition in attracting attention and support from government agencies can be high, especially when many businesses seek support from limited resources.

8. Call for capital to contribute to business by issuing shares

Issuing shares is also a potential way for businesses to raise capital. This requires businesses to meet a number of specific conditions and carefully prepare documents before implementation.

Advantage:

• Issuing shares helps businesses expand capital sources effectively and quickly.
• Unlike borrowing capital, businesses do not need to pay interest or repay debt to investors.

Defect:

• Issuing shares means sharing ownership of the business with shareholders, which can reduce management's control.
• Enterprises need to comply with legal regulations and carefully prepare documents to meet the requirements of the State Securities Commission.

9. Call for capital through venture capital funds

Venture capital funds have been chosen by many businesses as a place to raise potential capital recently. Startup businesses can look for reputable venture capital funds such as CyberAgent Ventures (CAV), Golden Gate Venture, Mekong Capital, Vina Capital Venture, IDG Venture to call for capital and receive necessary support.

Advantage:

• Venture capital funds provide significant capital for startups.
• Investment funds often have experience and profound knowledge in the field of venture capital, and can support businesses in management, marketing, and product/service development.

Defect:

• Businesses need to accept sharing shares or ownership with venture capital funds.
• Venture capital funds often set high requirements for growth potential and at the same time carry high risks.

10. Call for capital from angel investors

Calling for capital from individual investors is an important way for startups to attract necessary capital. These are individual investors or individual investment companies interested in your field, often have idle capital and wish to invest in potential businesses.

Advantage:

• Individual investors often make quick and flexible investment decisions, helping businesses obtain capital in a short time.
• Many individual investors are successful businessmen, have profound knowledge and experience in the business field, and can bring valuable advice and support to businesses.

Defect:

• Because investors often invest in startups, the level of risk is very high.
• Raising capital from individual investors requires building and maintaining personal relationships, which can sometimes complicate the management process.

11. The process of calling for startup investment capital is 100% successful

Below are steps to call for investment capital that businesses can apply to ensure success in attracting business investment capital:

• Step 1: Plan to call for investment capital : Determine the goal, the amount of money to call and how to use the capital. Develop a detailed business plan and financial strategy.
• Step 2: Search and select suitable investors: Research and identify potential investors, then approach through social network channels, Networking events or online platforms.
• Step 3: Prepare a thoughtful presentation for the project: Create a convincing presentation with detailed information about the project and business values, using images and specific data to illustrate.
• Step 4: Propose the desired capital level and project valuation: Determine the required capital level and price the project based on development potential, market factors, and consider appropriate capital structure.
• Step 5: Invest in the project with your own capital: Demonstrate commitment and full understanding of the project by investing your own capital, increasing reliability and commitment from the investor.

Thus, 1C Vietnam has shared 10 effective ways to call for investment capital for startups. Hopefully through these methods, entrepreneurs can find suitable capital sources and grow their businesses sustainably.