6 ways to raise capital for your STARTUP

One of the most crucial steps when starting a business is Get a ticket.

Not having capital should not stop you from executing your big idea. On the contrary, it's a big challenge but it's not impossible.

There are a lot of ways to raise capital and today we will explain several ways to do so along with several hacks from our experience.

1. Debt

Borrowing will always be a good option, all you have to do is repay that money within a certain period and with interest.

Its advantages are that you will not give up ownership or control of the company, however, whether it goes well or badly you will have to pay that money. Likewise, too much debt could lower the value of your company, and it could be the case that when you issue shares you obtain less favorable results.

Debt works if you have good cash flow and if you don't commit to it significantly.

2. Shares

In this type of financing, you give ownership of your company in exchange for certain terms and conditions with the investor.

The advantages of financing with shares is that you will not have to pay if you are not making a profit, it can attract strategic partners who will help you, as well as a greater formalization of the STARTUP.

You'll have to be careful with your equity strategy so you don't lose control of the company and protect both founders and investors.

They are generally identified by series a, series b, series c, series d actions, until they are necessary.

3. Convertible Note

The Convertible Note is a simple contract in which the debt will have the option of converting into shares for the investor if certain conditions are met.

The conditions can range from: acquiring 1000 more users for the application, generating more than $500,000.00 in revenue and even increasing followers on Instagram.

If the established conditions are met, the capital given to you by the investor can be converted to shares. Otherwise, the investor may choose to return their money together with interest.

This form of financing is a great option for early-stage STARTUPS.

4. SAFE (Simple Agreement for Future Equity)

It is a new instrument that was practically invented by one of the best accelerators in the world “Y Combinator”.

It is an investment mechanism, but unlike a Convertible Note, it does not generate interest.

It allows you to receive investment and establish the number of shares that the investor will receive at the time of an investment round.

5. Crowdfunding (also known as Crowdfunding)

Collective Financing is about obtaining resources from a large group of individuals. It can be Fund with shares or without shares.

There are several platforms that give you all the facilities, for example: Play Business, Founder, Donor, Kickstarter, etc.

The downside could be that you will have to generate a good marketing strategy for the campaign to be a success.

6. Accelerator

An acceleration program, more than money, will also support you with advice, mentoring, bonding and investment. However, on many occasions they request a large part of the company in return. It will be good to review the terms and weigh up.

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Whichever way you choose, always take control of your company. Plan how much control you can give up and where your limit is. Funding is a big challenge but it's not impossible.

Do you have any doubts left? At RMG ABOGADOS we specialize in startups and we can be happy to support you, send an email to l.manzano@rmgsc.com‍