How to Raise Money From Your Connections

Once you’ve become properly acquainted with your connections, the opportunity might arise to receive help with your funding goals. This can be a nerve wrecking experience, but it doesn’t have to be. Here are some tips to help you raise money from friends, family, and your connections.

1. Ask for “gifts”.

A gift from a loved one or connection in lieu of a present that you would normally receive throughout the year can be a good way to receive funds. If your friends, family, and connections feel strongly about the work your company is doing, it can be easier to receive than a loan. Just make sure that when you receive your gift, you also provide a contract upon receiving stating that you are receiving a gift, and not a loan. Believe it or not, confusion about gifts have been known to soil plenty of personal and business relationships.

2. Ask for a loan.

This is appealing to the borrower because they receive interest, and a return on their investment. Again, it is suggested that a promissory note is created as a contract to safeguard both parties. The downside of borrowing is that later on you can get wrapped up in repayments instead of generating as much business revenue.

3. Ask for equity.

Think your borrower could make a good business partner? Equity might be the best choice for you. This gives your borrower a percentage of ownership in the company, and can be quite risky. This also involves pitching your concept and a variety of different contracts to ensure protection for both parties.

If you feel like you can launch your business on your own, you should do it without the help of others. The three methods of raising money listed above risk your relationships and connections. All the same, most successful businesses have started with the help of gifts, loans, and equity.

Posted By: Shannon Harper 8 years ago

Category: Finance

Tags: equity, Funding, money