Startup Funding: 7 Ways To Raise Money For Your Business In 2012

Startup funds will be harder to come by in 2012, according to hundreds of venture capitalists polled in a recent survey by the National Venture Capital Association.

Sixty-nine percent of the surveyed VCs said they expect venture investments to stay the same or decline next year, compared to just 48 percent who felt that way in last year's survey.

Thankfully, small-business financing options outside the venture capital industry are rapidly proliferating in the digital age.

With just a few clicks, anyone can pitch a business idea to the growing ranks of angel investors. In addition, a number of Web services now provide platforms for entrepreneurs to raise small sums of money from large pools of people -- a process known as crowdfunding.

Even Congress is showing deference toward the Internet's capacity to connect businesses with capital, as lawmakers weigh rule-changes that would allow entrepreneurs to use social networks to sell stakes in their startups. (Under current securities law, entrepreneurs can only solicit donations.)

Still, a large share of startup funds continues to flow from the old-fashioned lender that small-business owners love to hate: banks. And despite reports that small-business lending at banks recently tumbled to a 12-year low, there are still ways for entrepreneurs to improve their chances of being deemed credit-worthy in the eyes of bankers.

So regardless of whether you run a tech startup on the hunt for strategic Silicon Valley investors or you own a local restaurant that's in need of nothing more than a simple bank loan, entrepreneurs must recognize that in the new year, the fund-raising game has changed.

Here are the new ways to raise in 2012:

Janean Chun contributed reporting.

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Comments

[askconny]

02:03 PM on 01/03/2012

Crowdfunding is an interesting addition to possible options for business funding. When it comes to using it for business, it is important to understand the legal and SEC issues around getting money from investors. So read the small print before proceeding and make sure everyone is on the same page about repayment & other terms.

[weliamtone]

04:51 AM on 01/02/2012

it's helpful, thank you share it

[dorisoyab]

07:00 AM on 12/31/2011

This article was helpful. I think I'll be investigating crowd funding. I have a very small business. I have been trying to get my product on the market for months, but money is so tight. I can only afford to put a little funding towards the project each month out of my own pocket. But you know what.... I'm going to keep going until I get my product on the market.

[epraizer]

03:39 PM on 12/26/2011

For your convenience there is the best affiliate program in the Internet. They are interested in your friends and colleagues for the most exact statistic. So this site offer you the following:

1) Your get $ 14 for doing a survey
2) Get $ 15 to your account (for each involved partner)
3) Get 20 % from the earnings of your partner.

link:
http://Survey-Faq.com?ref=2545704

:p

[Deborah J Boyd]

09:55 AM on 12/26/2011

This video makes a great presentation of what Investing is all about. I am a capital broker that does not charge up front fees. You need to discover and define a market and most investors have specialties. Oil & Mining, Phamra, Retail, RE, etc. The trick is in designing the business plan that the investor wants to see. They are interested in ROI and a plan to become profitable in 3 years or less.

[jonesengr]

11:19 AM on 12/25/2011

I did not see the use of Credit cards as one way to handle business expansion. It is tricky but works if you have a steady income but are building new work, sales or increased revenue.

[Frank-Landfield]

11:20 AM on 12/24/2011

Cool

[ShoreSage]

08:44 PM on 12/23/2011

Be careful of SEC and blue sky laws.

[MyLife Sf]

03:29 PM on 12/23/2011

While I appreciate these tips, none of them are "new ideas for 2012...especially not asking your friends and family or getting a bank loan.

[SDLee]

02:32 PM on 12/23/2011

I realize the editors here feel compelled professionally to fill the vast media space with as much "stuff" as possible but how many HP readers are aspiring Bill Gates types who require venture capital or crowd funding? I'll wager not a single one. Many however are small mom and pop type business owners and what they require is customers not debt.

[DrBlu]

11:07 AM on 12/27/2011

@SDLee, this may not be your cup of tea, but for small startups like ours, it is very useful. We have looked at crowd funding before but not felt we had the expertise to approach or use it correctly. Now that we have a better idea of wht we are doing, it is definitely on our radar. As a HP reader and occassional contributor, I appreciate pieces like this. Dr. Jim Blumenthal for NeuroHealth Diagnostics, Inc.