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9 simple ways to raise capital for your ecommerce startup

9 simple ways to raise capital for your ecommerce startup

Entrepreneurs and investors share their tips on how to get cash to fund a new business.

“In the first six months of building my startup, Humblee, we participated and won the Make It in Brooklyn pitch competition,” says Zuley Clarke, cofounder, Humblee. “In addition to the prize money, we received valuable feedback from influential judges, made connections with investors and generated a buzz surrounding our business. Winning the pitch competition was incredible, but the benefits of simply entering [a pitch competition] are great too.”

6. Ask your employer for help.

If you currently have a job, and have a good relationship with the company and/or senior management, “approach your current boss for an in-kind contribution to your new business venture in exchange for equity or future re-payment,” suggests Roy Tal, cofounder, Homenova.

“Office space, internet, utilities, chairs, computers, phones, IT support can all add up to tens of thousands of dollars a year, which can be a fair amount for a business that is just getting on its feet,” he notes. “Your current employer is already paying for the above. And if [the company] is already aware that you are pursuing a new business venture and likes the idea, [it] may be open to allowing you to use [your] current office facilities or even better, contribute some funds.”

7. Take out a small business loan.

“Most people assume they're going to get angel or venture capital investment when starting an Internet-based business,” says David Nilssen, cofounder & CEO, Guidant Financial. “But the reality is very few ever get funded [that way].” So he advises would-be entrepreneurs to take out a loan.

“Unsecured loans can provide up to $150,000 in small business financing without personal collateral required from the business owner,” he explains. “What’s more, the funding process is fast — most deals close within three weeks or less.”

You can also apply for an SBA loan. “SBA loans offer a bevy of benefits for entrepreneurs, including low interest rates, long repayment terms and no ballooning costs, so you can focus on what’s really important: building your business.”

8. Ask friends and family (for a loan or investment).

“Obtain loans from friends and family,” suggests Darren Hill, cofounder & CEO, WebLinc. An advantage “of borrowing from friends or family is the repayment plan can be tailor-made, unlike bank loans. [Just] never forget this is a business [arrangement], which can alter the relationship you have with your financier [i.e., friend or family member].” So be sure to have a small business attorney draw up a formal agreement, stating the loan and other terms, for all parties to sign.

9. Use some of your retirement savings.

If you can’t raise cash by another means, consider dipping into your retirement savings. “A retirement rollover, also known as ROBS (rollover as business startup), allows individuals to roll money from their IRA or 401(k) into a new business venture, penalty free,” says Nilssen.

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