Question

Discuss how a person raise his capital by using business angel to start up his new concept laundry business

Discuss how a person raise his capital by using venture capital to start up his new concept laundry business

Discuss how a person raise his capital by using Initial public offering (IPO) to start up his new concept laundry business

New concepts that are drive thru, pick up and delievery services

(200words)

Thanks

Answer 1

Raising capital for laundry business start-up

The following steps are common to all the financing types. The entrepreneur must have the following before raising capital

• The laundry business proposal must have a sound business model plan explaining what the model is about. This must include what is the start-up's product and what will strive to achieve and the targeted customers
• The profit margins involved in the business, what is the scale of the business and the growth prospects in the coming years. This must also include which geographical areas will the start-up seeks to serve and what will be the mode of serving the customers-whether it will be online booking or offline
• It is important to explain how the new concept of drive-through, pick-up and delivery services will revolutionalize the industry and how the start-up will be able to gain a market-share through the concepts
• Having a Minimum viable product - Before going for a capital raise, a plan, cash flow projections, and industry research must be done prior to searching an investor. There are more chances that an investor will invest in the entrepreneur's project if the future growth prospects are attractive.

Using business angel

Business angels are independent and wealthy investors, who are looking out for attractive and innovative businesses to invest in. They provide capital either through equity financing or convertible debt. A lot of times, angels are among the friend or family of the entrepreneur.

Raising capital from business angels would involve finding an angel investor which involves tapping personal connections and referrals. The entrepreneur must look for an angel investor who has worked in the laundry business earlier and is currently investing in laundry and allied businesses. There are many Angel investor association which have many members looking for funding businesses. Once, a business angel is found, a solid demo of the laundry business is essential along with a brief pitch of the business. Most importantly, it should build trust in the business angel about the business and how the entrepreneur plan to utilize the funds to build a sound business.

Using venture capitalist

Venture capitalists are a type of private equity providing funding to start-ups and small businesses with long-term growth potential. Venture capital is raised generally after the firm has already established its roots, unlike in the business angel case.

A search for venture capitalists should be carried out in an industry-specific manner as every venture capital firm operates in a specific set of businesses. Once The pitching might be similar to pitch, however, it is important to make the venture capitalist believe that the only hindrance to expanding the business is capital and the firm is ripe and matured enough to enjoy economies of scale.

Raising capital by using IPO

Raising capital via Initial Public offering comes generally comes after the angel or venture capital stage. A company that has generally reached a mature stage of business operation goes for an IPO. Raising capital through an IPO would require the entrepreneur to select an investment bank that will guide him/her through the process. There are basic due diligence and regulatory filings that need to be done before a company is eligible for an IPO. The underwriter is involved with various work related to drafting engagement letter, letter of intent, registration statement, and the red-herring prospectus. The red-herring prospectus would consist of details of the company along with roadshows to evaluate the demand of the issue which gives an fair idea about the issue price and the capital which can be raised through the issue.