Where's The Money-Investment Options for Small Businesses


Amazon, one of the largest companies in the world today, started out in a garage. Yes, in a garage. Many of us start in our bedrooms. Each year brings a new wave of small business launches that have dreams to make a difference. Dreams to be a big brand. They have great ideas, innovation, and a structured plan, but they lack funding.


Funding can be a game changer for small businesses. It can launch small businesses into the major league and enable them to acquire the resources they need to get their idea off the ground. However, while big brands always have access to financing facilities from big banks, small businesses do not have that opportunity. They carry risk. Below are some of the sources, small businesses can use to acquire funds to turn their dreams into reality.


Business Grants

Never underestimate the power of free money. There are tons of small business and minority owned grants that will help small businesses get off the ground. Check out NAV for a heaping list of business grants, you may be eligible for before applying for a loan. There are also some links below to resources that may help your small business or start-up.


Best Small Business Grants of 2020

  1. FedEx Small Business Grant

  2. Nav’s “Legitify Your Small Business” Grant

  3. Eileen Fisher Grant Program

  4. Small Business Innovation Research Program

  5. Caleb Brown Urban Entrepreneur’s Community Grant

  6. USDA Rural Development Business Grants

  7. InnovateHER Women Business Challenge

  8. Bill and Melinda Gates Foundation Grand Global Challenges


Venture Capitalists (VC)

Venture capitalism is a form of private equity, where venture capitalists invest in promising small businesses as a trade for equity. Businesses are required to have established operations and must already be running. The requirement for return is also very high since the amount invested does not belong to them. They are trusted by other people to invest their money, which is why pitching your business to them needs great growth potential.


The Top VC Firms

  • Andreessen Horowitz.

  • Benchmark.

  • Index Ventures.

  • Sequoia Capital.

  • Bessemer Venture Partners.

  • Founders Fund.

  • GGV Capital.

  • IVP.


Angel Investors

Other than venture capitalists, small business owners can approach angel investors. Angel investors are people with high net worth who want a role in running the start-up. They must be interested in your cause and growth prospects to invest in your venture. Using their own money to acquire shares, they require a high return and a solid plan. However, once they are convinced, they fund the business with a generous amount of capital such that no other source is required. The Angel Capital Association categorically lists angel investors by state for the ease of start-up owners. They also hold a yearly summit which may be worth your wild.

Crowdfunding

There are numerous online crowdfunding platforms where individuals pitch in funding for a start-up. Debt-based crowdfunding platforms are founded on a peer-to-peer lending basis. This gives the small business a credit rating, where a lender can provide capital in exchange for repayments with interest. Equity crowdfunding is based on a similar formula apart from repayments and interests. They contribute their investments in return for shares and later dividends with no guarantee for a return on investment.


More common crowdfunding platforms include Kickstarter, which is reward-based. For instance, if you have a start-up for a new beauty product, people who would pledge an amount would receive the product and some complimentary items for free. The free product would not cost more than the pledged amount making it profitable funding. Crowdfunding is best accompanied by a digital and or physical marketing campaign that raises awareness.



Using SBA

The Small Business Association (SBA) is a governmental agency which provides financing options for start-ups. The most common option are loans which are based on Lender Match. The platform assists in finding a lender who would be willing to invest in your start-up while the SBA reduces the risk for them. SBA also offers grants to small businesses with general requirements regarding costs, audit, and legal prerequisites. The SBA further matches the investment made by private investors through SBIC (Small Business Investment Co.) for small ventures. These public facilities are generous in their terms and conditions and offer investments for up to $10 million.


All the above sources lend to small business so they can be next Amazon, fingers crossed. Please contact #TheGopaulGroup for more resources, consulting, and help growing your business.


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