Where to Find Investors for Online Business if You Are a Student

Students often get the finest ideas for an online business. They have the gift of time, a creative universe, sheer willpower and a lack of ego. Moreover, it is also the best time in history for students to set up an online business. There is everything available to kick-start a venture these days, except investment for students.

The fact is pretty straightforward. If you really want to start an online business, you need money. You need liquid funds to build it, rent infrastructure, pay a team of developers and designers, and most of the cash is required to promote it. According to an online report, the lack of funds is one of the top reasons why startups fail. Especially in the jungle of financing options, students can quickly lose their head.

Starting an online business can be difficult especially for students, who lack not only experience but also an investment fund. Here are a few ways for them to raise money for an online business. Also, take a look at my latest articles on this website and share it on social media if you like it.

Find an investor inside yourself

Starting an online business while still studying can be a demanding task. There will be a vast number of distractions that will pull you away from the process. Make sure that such distractions do not weigh down heavily on your finances. Cultivate the good habits of saving and value buying in order to save a part of your monthly expenses that you could invest in your online business. The idea of a weekend party may be highly lucrative; you are required to force yourself to sacrifice some desires regardless.

Review your personal finances weekly and monthly. Not only will it help you in keeping a control over your expenses, but also allow you to finance some extra cash into your business. Students can use mobile apps to manage finance and build a budget for their business-related operations. We may not realize, but there is an investor in all of us.

Help from friends and family

Having friends and a family that supports you financially and morally can be a booster when you start an online business. It is very likely that you can get some financial support from your beloved ones even if you think it is not a right thing to do. Mom may not even ask you for a business plan. But remember, funding from family or friends comes with strings attached.

This is why you have to think of repaying the family positively, either in the form of monthly/quarterly installments or by sharing equity with them in your business. When you give them equity, they are entitled to make decisions about your startup. Eventually, this can cause complications between you and your relatives. Instead, a loan or debt financing in the family is a better way to go.

Startup competitions in university

Participating in startup competitions hosted in a school can be a great opportunity for you. Universities can help in building investments for college students but only for those who actually deserve it. The only thing you have to keep in mind that in order to take part in such competitions you have to be enrolled first. And it is quite easy to solve with a college application help service for students, so you won’t have to spend a lot of time and concentrate on what is important – your startup idea. Most of the universities organize some programs where students are allowed to present their business model.

The university may itself invest in your business or connect you with potential investors outside the board. Students can pitch investors without the need of traveling far to a startup event. Competitions are a great way to find investors for online business. Just the experience of being present among other entrepreneurs is valuable to both you and your business.

Keep in mind that you follow all the rules and regulations of the competition since your professors will be watching your presentation as well.

Look for Crowdfunding

Before you trouble yourself with the idea of sharing half of your business equity with VCs and angels, think about crowdfunding. Crowdfunding can help you in raising funds for your online business. Instead of a huge investment from a single investor, you are pitching your idea to a crowd of investors for a number of small investments. In return, they would expect a product, service or equity.

In some cases, crowdfunding investors will simply loan the money your venture needs, in return of interest. On the successful implementation of the funds in the venture, they get their money back with interest. However, such creditors do not prefer this since they are the ones who get paid at last in case of a bankruptcy.

There are many popular online crowdfunding platforms helping college students raise money for their online startups. Be aware that crowdfunding does not have a proven track record yet.

Get a microloan from SBA

Small Business Administration is a government organization that helps in small businesses getting loans up to $50,000. It matches lenders with suitable small businesses according to a set of criteria. Unlike crowdfunding, SBA helps in decreasing the risk for both the investors and the students.

There are many benefits of SBA loans, for example, lower interest rates and smaller down payments. Some loans are granted without the need for any collateral. Moreover, students are supported with counseling from the lenders which counts as a highly valuable resource for a small business.

Some lenders will restrict the usage of funds for your online business, which is why it is advised to go through all the terms and rules. SBA can help you with working capital or fixed assets such as infrastructure, furniture, real estate, machinery, etc.  There is a long list of eligibility criteria on the SBA website. Usually, the lenders require your online business to be able to repay the loan and have a solid business model.

Let Accion lend you a loan

Accion is a worldwide popular organization that helps in lending microloans to small businesses and startups. It is one of the largest microfinance networks in the US. Accion can help college students from various backgrounds to raise funds for their online business.

If your business is in the idea stage right now, then you will be required to submit a business plan with a 12-month cash flow projection. Any small business will be eligible if they are successfully operational for 6 months.

Angel Investors for a small online business

An angel investor is a person or a group of people who invest in a business to help it grow and expand. In return, the angel is looking for equity and decision power in the business. Angels can invest in a startup in its early stage using a high risk – high return strategy. The amount of investment usually made is a few hundred thousand dollars, just enough to help with the seed stage.

As a student, you can find an angel investor who specialized in the particular online industry related to your business. For example, an angel investor who owns a large payment gateway company may have some investment plans for your similar business. In return for his investment, an angel will ask for equity in your company.

Angel investors are interested in the return on their investment and the exit strategy. Finding the right investor for your business can be very crucial to its success.

Leverage through Networking

Although you wouldn’t believe a potential investor for an online business may exist right in your network. Building your startup profile on platforms like AngelList and CrunchBase will help you to quickly present your business model to anyone anywhere in the world. Use Linkedin to build your professional network. Attend startup events, hackathons and contests to find the investor who will help you in growing your online business.

Conclusion

Starting a business needs cash as a catalyst and an investor can help you with the same. Remember, an investor is not just helping you but himself, he cares about his ROI. There are some stories about college students who got funded with millions of dollars by venture capitalists. However, such cases are very rare.

As a student, you should focus on developing a solid business plan that will convince an investor.

Paul Calderon

Paul Calderon

Paul spends his time mentoring students in Florida. At home, he is either reading or helping his little ones with homework. He also writes for Edu Birdie and offers academic guidance for college students.
Paul Calderon

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