During the economic downturn, it is more difficult than expected for start-ups to raise funds, and some people even say that it is impossible. Start up funds are particularly important for start-ups. As an entrepreneur, you can raise the funds you need through the following four ways:
1、 Borrow money from yourself
In general, 30% of successful entrepreneurs' venture capital comes from their own savings. But don't use this money to buy company equipment, because you need to make sure that you have obtained enough founder shares. It's better to borrow money first to solve urgent problems. Your money can help you get a certain proportion of the original shares and buy back the shares you lost in the future.
2、 Borrow money from relatives and friends
The tradition of borrowing money from family and friends has a long history. This is a win-win model, because in this way, the borrowing interest rate will be 2% to 3% lower than the general market borrowing interest rate; For investors, the interest earned will be 1% to 2% higher than the savings interest. In the current depressed economic environment, banks charge higher interest on loans and pay lower deposit interest.
3、 Borrow money from patient investors
In a recession, think twice before deciding who to borrow from, and stay away from lenders eager to collect returns. Because in the economic downturn, the output after input is often difficult to predict. You can choose to find lenders from business partners, mentors or familiar suppliers, who will provide a broad repayment period. Sam Walton, the famous entrepreneur (founder of Wal Mart), raised the first startup fund through his social network.
4、 Borrowing money through the Internet
For example, On Deck Capital is an "online bank" specializing in loans to small businesses. The company pays more attention to the cash flow of the enterprise than to the credit score and tax declaration, and replaces monthly installment payment with daily deduction. On the Internet, there is also a new financing financial service called "P2P (person to person)", which can realize borrowing money from strangers. For example, by searching for "person to person", you can find such companies and publish your requirements to achieve the purpose of borrowing money. It is worth noting that the interest rate of this kind of borrowing is often high, but it can help enterprises get funds quickly in the credit crunch environment.
When you need money most, you should borrow money from the bank. Because when you need money most, you will need a lot of money. If so, you should first weigh the advantages and disadvantages of borrowing money from banks and friends.
1、 Borrowing money from a bank is a normal borrowing procedure, which requires no face saving. Face is something we value very much. If we borrow money from a bank, we don't need face, but we also need to spend face with friends and relatives. It's better to borrow money from banks.
2、 It is easier, safer and more convenient to borrow from banks. Because the bank is more formal, borrowing from the bank will be more formal and convenient. In comparison, borrowing money from relatives and friends, writing IOUs, and all kinds of worldly wisdom and details need to be maintained and paid attention to, and there is no bank guarantee.
3、 Borrowing money from the bank is also a better constraint for us. Because when we borrow money from the bank, we must repay it in time according to the repayment time, which is also a better constraint for us to repay the money in time to avoid disputes. Relatively speaking, if you borrow money from relatives and friends, you may be late in arrears and delay repayment, which will affect many relationships. Borrowing money from the bank avoids the deterioration of this relationship and some adverse effects, so I recommend borrowing money from the bank.
Although relatives and friends will not ask you to issue business models and financial information like professional investors, they still want to see something tangible. Therefore, entrepreneurs still need to consider several aspects when borrowing money from their relatives or friends:
1. Speak carefully. Although you are facing friends and relatives, you should still be cautious in your words. If you say I want to borrow money when meeting people, then I'm afraid you will find it difficult to raise funds. Put your words at the end, and the progressive speeches will greatly increase your chances of success.
2. Vibrant and respectful. Nothing can kill everyone's confidence more than a passive and arrogant attitude. Everyone is willing to lend you money, naturally hoping that you can succeed. Nobody likes depressed people.
3. Think hard. Entrepreneurs should let investors think that your project has been thought out for a long time, rather than suddenly, so that they can get their respect. They will not think you are joking and lend you money.
4. It is not required to reach the goal in one step. Generally speaking, you need 100000 yuan, but usually entrepreneurs can't find a person willing to lend so much money. In addition to separately borrowing money, it's better to set a deadline for yourself, and after the corresponding results are achieved
