A lot of people ask me a whole range of questions and one of the top questions that I get is “Kerwin what types of funding are available for an entrepreneur or business startup like me?”. Let’s see, in detail, the 3 types of funding available for small business.
And I often respond and say, “There are three types of capital that are available to you right now. The first type of capital that we refer to is dumb money.”
It’s really important to know what dumb money is and I know it appears hyper critical and it’s not designed to be, it’s designed to get your attention. Dumb money is essentially existing cash or existing capital that has no intelligence that comes with it. it’s purely a cash instrument which typically comes from places like a bank or what we call the ‘Triple F Fund’ which is the “Friends, Families, and Fools?.
Now, you might be thinking “you call my friends, my family, my fools: dumb?” Well, I might be calling the fools dumb but not your family. Okay, but what I’m saying is that in many cases this capital comes with no intelligence or experience attached to it.
Which leads me to the second type of capital which is called Smart Capital or Smart Money. We’ve got the Dumb Money, that’s the banks and the Triple F Fund and then we’ve got the Smart Money.
Smart money typically comes from someone who’s already been in business before. They are typically someone who’s built a business, sold a business, they have cashed out and now they are a cashed up investor, either a sophisticated investor possibly an angel investor and they are looking to place their money into some other business that they can mentor.
Now it’s really important to point out here at this level these people are not looking to control your business, in fact, they want everything but.
All they want to do is put their money in for it to work and give you the guidance that’s required to use that capital to give you the greatest possible chance of growing and exploding your business. So Smart Capital or Smart Cash or Smart money is very attractive.
And the third type of cash, the third type of capital which is incredibly sexy is what we call the Smart Connected Cash.
Now, as the name actually explains, it does what it says on the box. This access to cash not only has experience and intelligence but it also has high levels of connections that come along with that cash. So these are the people that have experienced, so they can guide you through business and help you, and answer the questions, and provide you with support and mentor, and coaching in some cases, but they also have connections.
Which means, they can open doors for you, give you introductions to new suppliers or to new customers that can essentially leverage what it is that you are doing to help you grow even faster. And again if you’ve got the smart connected capital it’s in their best interest to introduce you to a new supplier who can lower your costs.
It’s in their best interest to introduce you to a new customer or a Joint Venture partner that can potentially add more revenue to your bottom line.
Join the conversation below or tell us if you’re looking for capital or if you have raised capital before and how you did it!
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