RAISING CAPITAL

A Presentation by: Jheam Reinz A. Montes BSEE-4 REPORTER 9

• So, what does capital raising mean in simple terms? It’s the

process a business goes through in order to raise money, so the

business can get off the ground, expand, or transform in some

way.  
WHAT IS RASISING CAPITAL?

• Raising capital is when an investor or a lender gives a business

funds to assist with starting, growing, and managing day-to-day

operations.
WHAT IS RASISING CAPITAL?

Relating to the actions that a company takes in order to find new

capital to finance its activities.

• Capital is the lifeblood of business. Without capital, you cannot

continue to fund your daily operations. Raising money for a

business is just the first step to get it off the ground. Beyond that,

you’ll need to raise funds to keep it moving.

• According to the U.S. Bureau of Labor Statistics, lack of capital is

one of the leading reasons businesses fail to survive, with just 25

percent of businesses lasting past 15 years.

According to a recent study, over 94% of new businesses fail during first year of

operation. Lack of funding turns to be one of the common reasons. Money is the

bloodline of any business. The long painstaking yet exciting journey from the idea to

revenue generating business needs a fuel named capital. That’s why, at almost every

stage of the business, entrepreneurs find themselves asking – How do I finance my

startup? -[Link]
RAISING CAPITAL

• Some entrepreneurs consider raising capital to be a burden, but

most consider it a necessity. Regardless of their stance on the

matter, raising capital is an essential step for entrepreneurs,

founders, business owners, or anyone looking to start a company.

• DEPT and VENTURE Capital

• INCUBATORS and ACCELERATORS

• GRANTS

• COMPETITION
DEPT Capital

• Debt capital is the most common way startups get the money together to

launch their businesses. The concept of debt capital is that you borrow

money to raise the necessary funds.

• Traditional bank loans, credit cards, online lenders and Federal loan

programs are just some of the ways you can start raising capital via debt.
DEPT Capital

• Existing businesses will need to ensure they have a positive credit

history to secure loans. In contrast, new business owners may use

their personal credit scores to secure a loan.

• The way debt capital is used depends on the size of the business. Although

a small business may use debt capital by taking out a loan, corporations

often choose to issue bonds, especially if national interest rates are low.

• If looking at capital for business by taking out debt, watch your debt-to-

income ratio to ensure you aren’t drowning in debt.

Pros Cons
• It doesn’t dilute your ownership • Potentially higher interest rates
• No lender claims on future profits • May make it difficult to secure third-
• Interest is tax-deductible party equity investment
VENTURE Capital

• Venture capital is financing given to startup companies and small businesses that are

seen as having the potential to generate high rates of growth and above-average

returns, often fueled by innovation or by carving out a new industry niche. The

funding for this type of financing usually comes from wealthy investors, investment

banks, and specialized VC funds. The investment does not have to be financial, but

can also be offered via technical or managerial expertise.

• Investors providing funds are gambling that the newer company

will deliver and will not deteriorate. However, the tradeoff is

potentially above-average returns if the company delivers on its

potential.
VENTURE Capital

• For newer companies or those with a short operating history—two years or less—

venture capital funding is both popular and sometimes necessary for raising capital.

This is particularly the case if the company does not have access to capital markets,

bank loans, or other debt instruments. A downside for the fledgling company is that

the investors often obtain equity in the company and, therefore, a voice in

company decisions.
VENTURE Capital

• Pros • Cons
• No repayment requirements • You no longer own 100 percent
• Lower risk of your company
• Bring in partners with expertise • Time and effort required to
and talent secure equity investors
INCUBATORS and ACCELERATORS Capital

• For entrepreneurs, growing a startup is a multifaceted process. The development of

an early stage company often includes engaging with the startup community,

finding experienced mentors and advisors, and getting connected to funding

sources. Joining a startup incubator or business accelerator program provides an

ideal environment to make these strategic connections possible, increasing the odds

of long-term success.
INCUBATORS and ACCELERATORS Capital

• While ‘incubator’ and ‘accelerator’ are often used

interchangeably, there are ways to distinguish the two.

• Incubator programs are designed for startups refining their business plan as they

navigate challenges from the idea stage through the growth stage. They typically

serve multiple early stage startups with companies representing a wide range of

disciplines. Incubators are heavily focused on regional economic development and

funded through a combination of public sources and private grants.

• Strong relationships with regional players at universities and venture capital firms

can help to further nurture a talent pipeline that supports innovation and regional

prosperity. Though companies can mature out of an incubator after achieving

significant milestones, there is no set start or end date in duration for companies

to participate. Many incubators also function as not-for-profit entities. 

BENEFITS:
• Use of a physical business address versus your residential address
or a PO box.
• Access to desk space, coworking space, or startup studios.
• Reserve conference rooms for meetings.
• Collaboration and co-creation among participating startups.
• Structured support from mentors and industry experts. 
ACCELERATORS Capital

• Accelerators are purposefully designed for startup companies whose development

falls anywhere between the idea and growth stages. Startups selected to participate

will have a minimum viable product (MVP), may have formed a prototype, and may

have already received pre-seed funding. Accelerators function as a catalyst for high

growth among startups by providing professional levels of promotion, education, and

capital that might otherwise take years to achieve independently.  

• The economic focus is placed on building the portfolios of companies in each cohort

and helping these companies scale at a more rapid pace. Most accelerators work

with angel investors, venture capitalists (VCs), seasoned founders, and industry

experts to advise and form collaborative partnerships with other entrepreneurs.

Through one-on-one mentorship, startups are able to overcome common challenges

in a shorter timeframe.
ACCELERATORS Capital

BENEFITS:
• Participate in a focused, disciplined program designed specifically
for your industry or sector.
• Achieve key milestones while being mentored by experts.
• Build camaraderie with other founders who are at the same
business journey phase.
GRANTS Capital

A sum of money given by a government to an organization to buy

buildings, land, equipment, etc., Or to make improvements to

them.
GRANTS Capital

A business grant is a sum of money given to a business in order to help

them further their business. They’re usually distributed by governments,

corporations, foundations, or trusts. Unlike many 

other types of business funding, grants don’t have to be paid back and

business owners aren’t required to give up equity in exchange for a grant.

However, most small businesses probably won’t qualify for a small

business grant, as they’re tied directly to government agencies that

have specific goals. There are some categories of business that are an

except, though, including research and development companies, as well

as some high tech companies.

However, most small businesses probably won’t qualify for a small

business grant, as they’re tied directly to government agencies that

have specific goals. There are some categories of business that are an

except, though, including research and development companies, as well

as some high tech companies.