Knowing how to start a business includes identifying the ways to get money for your startup. Knowing where to find investors for online business if you are a student is therefore vital.
As the internet continues to advance, more and more young entrepreneurs are launching online businesses. Starting a business while you’re still a student is actually an excellent idea, since doing so gives a business ample time to grow.
In fact, many successful entrepreneurs began their careers even before they graduated from college. However, the main question that student entrepreneurs face is how to get money to start a business. Unless you’re a student with vast personal wealth, starting a business can be tricky if you don’t know where or how to get investors. But acquiring business financing need not be a mystery. In this post, we look at where to find investors for online business if you are a student.
Investors for your online business
Family and friends
One of the most common sources of business capital is your personal network of family and friends. Students are often turned down by banks for loans, largely due to the lack of good credit score and personal capacity to pay back debts. On the other hand, family and friends are often more responsive than private lenders since they know you well. If you decide to ask family and friends for funding, make sure that you explain your business to them in a manner that they will understand. Also, since financial issues can easily damage relationships, keep your family and friends informed regarding the progress of your business.
A new but increasingly popular way to get money for an online business is crowdfunding, which involves asking the general public for donations that are pooled to serve as capital. Crowdfunding is often conducted in websites such as Kickstarter, GoFundMe, and IndieGoGo. For a fee or a portion of the total donation, these websites serve as a platform where you can solicit donations. In exchange, donors may receive some form of compensation including the status of investor. For instance, donors can be granted by the business owner equity such as shares of the company. If you choose this option, it is important for you to be aware of the policies of the crowdfunding site. Furthermore, having a solid business plan and business model is essential if you are to successfully win over a large number of donors.
Another way to acquire business funding is by seeking out angel investors. An angel investor is usually a wealthy individual seeking new business opportunities. The angel investor will finance the business in exchange for a share. Winning over an angel investor also offers other benefits. For example, the investor may act as a guide or mentor that will help you grow as an entrepreneur. He or she may also connect you with invaluable contacts in the industry. Getting a hold of angel investors can be difficult though, as they often keep low profiles. Nevertheless, there are some networks that link angel investors with young entrepreneurs. Setting up an appointment for direct pitching is also an option.
Venture capital firms
Funding for your business can also come from venture capital firms. A venture capital is a firm that invests on new businesses. In exchange, the firm will acquire a share of the company. However, venture capital firms can be very selective in choosing which businesses to fund, which means that the competition between entrepreneurs can get very tight. Furthermore, venture capital firms may require the business to be of a certain size in order to ensure the profitability of their investment. For example, some firms invest a minimum of $250,000. In order to win over a firm, your business should have great potential.
Finally, student entrepreneurs who need money can also take small business startup loans through peer-to-peer lending or P2P, which involves the entrepreneur borrowing money from investors. However, rather than going through a bank or going directly to investors, P2P is conducted through platforms such as Lending Club. The platforms screen borrowers and then link those who qualify with investors. The borrower then pays back the loan with interest. While accessing funds for P2P can be easier than taking out loans from banks, borrowers still need good credit rating in order to qualify
Learning how to start a business is not complete without knowing how to acquire funds or how to get a business loan. After all, most businesses need investors in order to thrive. As a student entrepreneur, you will be required to ask more than just “help with my essay”; you will need the funding of investors. Knowing where to find investors for online business if you are a student is therefore crucial in turning your vision into reality.