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3 Capital Ideas For Budding Entrepreneurs


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One of the first considerations for a new entrepreneur with a good idea is to find the seed capital for the project. Most entrepreneurs would do their due diligence and feasibility study first to get a handle on the potential market and to get a strong indication of whether the idea would deliver the expected financial results. This documentation is then typically used, if the entrepreneur is convinced of its feasibility, to approach relevant parties to secure capital for the project.

There are 3 obvious sources of capital for an entrepreneur with a winning idea. In this instance, an idea itself is worth hundreds of thousands or even millions of dollars, so whoever you approach you must get your hands on a non-disclosure document. Approaching people without the protection of a non disclosure contract can leave you open to theft of your idea and hard work documenting the feasibility.

A non disclosure contract is worded in legal wording but essentially means, anyone who you approach for capital must agree that they may not use or speak about your information with anyone and they agree to pay you damages should your idea suddenly become a success for someone else. This type of contract is a routine thing and you can get them pre written from many good lawyers or even online.

The first party you see to secure capital, if you are 100% certain this idea will make a squillion dollars is yourself. This is the ideal situation because there is no risk of exposing your million dollar idea to anybody it also means you retain full control. Can you sell an asset? Can you devise a way to make the business pay from the start and let it pay for itself as you go?

The next is going to a bank for a business loan. They are generally much cheaper in terms of interest and loan costs than the third party. They are however a lot harder to secure capital from and will typically ask for assets to secure the loan against.

The third party is entrepreneurial investors. This group is usually a bunch of lawyers and high net worth individuals with cash to invest in start ups so they assess opportunities all the time. They are usually creative about hedging their investment risk on you by finding other ways to make things sure they will work. Do not agree to the first offer as your idea is an asset in itself and getting 2 or 3 bidding against each other to fund your idea is the best of all scenarios.

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