Finding Capital

Finding Seed/Development Capital

Many entrepreneurs need seed or development capital depending on what stage their business is at. Depending on the business, this capital might allow you to build a minimum viable product, buy equipment, lease space and acquire inventory.

As the costs of starting a business have come down drastically due to the Internet and other technological innovations, an increasing number of entrepreneurs find that capital – often £150,000 or less – can go a long way.

Sources of Funding

Some entrepreneurs start with lots of spare savings and “bootstrap” their business, but for those who can’t do that your options are actually pretty limited.

Banks. Banks require collateral and track records, so tend not to lend to small businesses. Loan repayment can drain vital revenue from businesses which are young and need to re-invest in their growth.

VCs. Venture capitalists are the main institutional investors in early-stage businesses, but only a very few of them invest true seed capital. Most want to see some progress in a business first, so when you’re still at seed-stage they’re off-limits.

Business Angels. Some very wealthy individuals known as angel investors do invest seed capital, but it’s actually a pretty small proportion of the angel community, and finding an angel who not only does seed investment but happens to be interested in your particular area of business can be like finding a needle in a haystack.

Rewards-Based Crowd Funding. With reward-based crowd funding, individuals give money to a creative project or endeavour in exchange for a “reward” – typically the product or service that the company is producing or provides. After raising funds, project owners may have so many backers that it can be difficult to actually satisfy rewards orders in a timely fashion, if at all. Business that effectively raise funds through pre-orders, may find that their funds, and time, are quickly drained satisfying pre-orders and can’t then be put towards growth.

As a result, many entrepreneurs get stuck in a paradox, where they can’t raise money to build their business but they can’t build their business without money, and it’s because of this that many great entrepreneurial ideas never get off the ground. That’s where In Crowd comes in, making it simple for entrepreneurs to raise capital from In Crowd members as well as their friends and family.

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