Raising Capital through the Internet for that New Startup

by | Feb 10, 2016 | Business

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Nearly all facets of business are now conducted through the Internet, or electronically, and raising capital is no different. However, when trying to generate capital via the Internet to fund your new startup, it’s the work you do before you actually begin to try to raise capital that is the most important.

Strong User Base
No matter how strong your business idea, how brilliant your business plan, if you don’t have a strong base of customers who already believe enough in your business to use you, you’re unlikely to have much success raising capital via the Internet. Once you do have a strong user base, preferably with high retention, you can work to put the remaining pieces in place to start on a campaign to raise capital.

Business Plan & Financials
A strong business plan, reviewed by external experts, with thorough and reasonable financials is a must. You won’t be using the business plan to attract investors, but once interested, a serious investor will likely want to review the details. Your business plan will also help you iron out the little wrinkles that you didn’t see when you first came up with the brilliant idea; it will help you identify exactly how much capital you need to raise; and it will help you identify exactly where your newly-raised capital can be put to best use.

Regardless of how you plan to raise capital through the Internet, it is at its heart a matter of marketing. Planning your marketing campaign well in advance is key. Many entrepreneurs fail in their fundraising bids due to a lack of planning on the marketing side. Identify your target audience, craft your story, identify your key channels, engage outside help when you need to, and build your mailing list.

Social Media
Even if you choose not to engage a crowdfunding platform, social media is going to play a key role in any fundraising campaign conducted over the Internet. There simply isn’t a better way to get your business idea in front of enough eyeballs. Your Twitter and Facebook pages need to be thoughtfully built, your followers and friends steadily cultivated, and your posting regularity must be consistent. LinkedIn is an important social tool as well, allowing you to connect with professionals in a more formal way when compared to FB and Twitter. Explore some other social media outlets as well. Companies have successfully leveraged their social media channels to raise capital. Whatever the platform, the objective is the same: convert people in your social networks into believers in your business!

No discussion on internet fundraising is complete without touching on crowdfunding. At its core it is simply a focused social media initiative that aims to attract micro-investments from the “crowd”. There are many strong crowdfunding platforms that can help you reach your fundraising goals, once you’re ready to begin.

The US Securities and Exchange Commission adopted final several rules to allow companies to legally crowdfund and raise capital over the Internet. Contact VerifyInvestor.com to learn more about Rule 506(c) crowdfunding, which provides more capital to private companies than any other form of crowdfunding.

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