Being an entrepreneur means wearing many hats to get your business off the ground, and the one hat that seems to challenge us the most is the one with the dollar signs – aka, the funding one.
Because money tends to be a taboo topic, not many people are discussing the challenges it takes to create a business and how much start-up costs they actually sink into it.
Here, we listed the three major ways to garner funding for your business as a female entrepreneur.
If you’re an entrepreneur, then you’ve certainly heard of the term “Angel Investor.” This specific investor is a person who is willing to invest in your business for some form of exchange or ownership within your company.
Angel Investors are usually wealthy individuals who want to invest in multiple businesses that they see potential in and are looking to help you grow – both financially and through necessary resources like networking.
These investors are best for startups who don’t necessarily have that much cash flow or credit to take out loans. They tend to be flexible with their terms and agreements because they are investing their own money, and even better – they don’t expect the money to be paid back. They just want your company to succeed because that means they also make more money. It’s a win-win.
The slight downside of Angel Investors is that they will have a large say in your company’s direction as they are funding the majority of it, and they will also own a portion of your company’s equity.
VENTURE CAPITAL FIRMS
Because there has been a large influx of women-owned businesses, venture capital firms seeking female-oriented start-ups have been on the rise – and for a good reason.
This opportunity is tailored toward more established businesses that are making a comfortable profit but looking to expand their growth.
They also provide a large network of resources and people to connect with to grow your business.
Like any opportunity, the downside is that these terms tend to be stricter than others. They tend to expect a higher return in value because they typically invest more money. And they will have a firm say on the direction of your company, oftentimes even more than you.
One of the best ways to fund a start-up is to start small. Utilize your community, especially those who see your vision, recognize your growth and want to see you win.
However, simply because they are your community to you doesn’t mean you get to be lax about how you approach them with this opportunity. Create a business plan/proposal and present it to them just as you would a meeting with high-power executives. Talk about your company vision and goals and your financial projections. What will they get in return? Why should they invest? Answer questions like these.
The benefit of this type of funding is that trust is already established and they more than likely already believe in your vision. However, when money is involved it always leaves room to harm a strong relationship. So, make sure you’re serious about the help you need.
Getting people to invest in your company takes hard work and dedication. But the important part is to acknowledge that if you’re already at this place of thinking, then that means the funds are sure to follow next.
PS – If you want to start investing in brands you care about, check out our recent episode of the bossbabe podcast on How To Get Started As An Investor. Listen now!