The reason for this is simple: it’s a lot harder to get money from them. Moreover, they often don’t know what they’re doing.

Immediate Business Funding

1. Bootstrapping – Bootstrapping is finding a way to fund your company by yourself. Often this involves using your savings, watching every penny, and being very careful about cost/benefit analysis. That is to say, generally trying to get by on as little as you possibly can. While this is far from ideal, it does provide a few advantages in that you are beholden to nobody. You don’t have to worry about loan officers or investors telling you how to run your company. You can focus on doing things the way you think is best.

However, a lack of business capital funding can mean that you have to cut corners and really make do with what you have much of the time.

2. Love money – No, this is not a command or a suggested behavior. “Love money” is money loaned or given to you by friends and family. The average amount of business funding you can get in this manner is $20,000-$25,000. Of course, it’s also a much more common way of funding a business than going to venture capitalists. Many of the fastest growing businesses in America today were started on $20,000 or less, so this is a viable source.

Outside Business Funding

3. Angel Financing – This includes Angel investors, Venture Capital, and everything in between at all stages of financing. With the state of financing as it is, this is becoming a more and more popular option. However, the way that it’s handled still needs to change. For example, people are still asking for too much from VCs and Angels, and they are offering too much. This leads to wasteful spending. It’s important if you’re dealing with this type of financing to be very careful. A VC who loads you down with paperwork or claims to be interested in early stage financing but has never closed a deal should be approached with suspicion. Make sure the deal is simple, or you may find yourself losing your company.

4. Series A Financing – This is typically done after the company launches. It’s often done with a Venture Capital firm, but it’s the kind of money you need to build and expand. Series A business funding is usually in a range of anywhere from $2 million to $10 million. This is no small amount of business capital funding. It can help a company that’s already gotten some traction really move forward and make headway.

As you can see, there are several ways of funding a business, and these are only a few, but the important thing is that you choose the one that’s good for you. Be ready to pitch your idea quite a few times, prepare your presentation, and approach the people who you think will be best for the company you want to start. If you examine your options and figure out the one that’s good for you, you’ll waste less time and your company will have a much better chance in the long run.