Starting a business can be easy if you are able to acquire seed funding. Finding the money to purchase the equipment and supplies you need to get your business started is usually the biggest obstacle in your way. Seed funding is actually acquired after you obtain your initial start up small business loan as this money is used primarily for product development or product launch.
To acquire seed funding, you must have a good business credit record for the lenders to view. They need to be 100% sure that they are working with a reputable company and the only way to find this is out is by checking on your business financial records. Lenders typically like to see that you have been in business for about 3 years and that you have a sustainable industry. They will then check on your market research abilities to make sure you are actually creating products or services that your customers are seeking.
When you approach a lender or investor for seed funding, you are typically seeking out a company that will help you develop your products. Many times these investors will even provide you with a business plan and help you with your marketing strategy. Some of the companies that acquire seed funding have been able to create an initial product or service, but it was not marketed well or the design of it was flawed. Seed funding helps you fix the problems with the initial product and provides you with a change to acquire a new product for commercial sale. Of course you do need to have the right type of employees working for you that can help you develop and market the product using the seed funding.
Seed funding is often offered to young businesses that have great potential. If the investor sees that you are still forming your management team and you are on the verge of a potential breakout year, many of them will offer seed funding to help you along. Angel investors may seek out your company or you may need to find them in order to acquire the seed funding to get your business up and running.
When you are working with angel investors, be prepared to give up some of the control in your business. Since they are investing their money into your business, they often way to have control over the development of the products. They may also want to acquire control over other management decisions of the company in order to make sure their investment is worthwhile. Sharing control over a business that you originally created may not be on your agenda and seed funding may night be the right route for you to take. If this is the case, seek out other forms of financing like small business lines of credit or even personal loans. They can all supply you with the initial investment you need to establish your first product or service in your industry and make a name for yourself.
Usually an angel investor that offers you seed funding will look for an earnings of about 30% or more. This allows them to justify taking a risk with their money and pouring it into small businesses that may not yet have a product or service for their industry. The other thing angel investors will ask for when they provide you with seed funding is for an exit strategy. What happens if it has been 3 years and their initial investment has not been able to provide you with the means to produce and market a great product? What insurance can you offer the lender so their investment is not a complete failure?
Corporate Credit Concepts specializes in seed funding. For more information about seed funding and how it might benefit your business, please CLICK HERE for a free phone consultation.