10 Smart Ways to Raise Capital for Startups [Sample File Included]

Calling for investment is one of the most important journeys for any startup. It helps leaders obtain the necessary capital to develop products, services, and expand their market. However, to successfully call for investment, businesses need to prepare thoroughly and master the necessary skills. In this article, let’s explore the top 10 most effective ways to call for investment with 1Office!

1. What is Calling for Investment? When Do Businesses Raise Capital?

Calling for investment is the process where a business attracts financial resources from investors to realize its business idea, and it is conducted when internal capital is insufficient to meet the growth rate or the need for expansion.

1.1 The Concept of Calling for Investment

Calling for investment is an activity where a business presents its business idea and seeks investors to support and provide capital to meet the investment and development goals of their project or company.

The objectives of calling for investment can be very diverse, including expanding the business, developing new products, entering new markets, acquiring assets, or resolving other financial issues.

1.2 When Startups Need to Call for Investment

The timing for a business to call for investment depends on the following three factors:

• The business’s goals: Such as developing new products/services, expanding the market, or recruiting personnel, etc.
• Financial situation: If the business is facing financial difficulties, unable to pay debts, etc., it needs capital to maintain operations.
• The business’s market: If the business’s current and future market has development potential, calling for investment will be easier.

If a startup meets the following factors, it can consider calling for investment to develop its project:

• Has a detailed, feasible business idea with development potential.
• A quality, experienced team.
• A clear target market, with increasing demand for the product/service.

Here are some specific times when a startup may need to raise investment capital:

• Startup stage: This is the stage where the business needs capital to develop its product/service and build its brand.
• Growth stage: This is the stage for raising capital to expand the market and the scale of the business.
• Transition stage: The business needs investment capital to innovate its product/service or expand into new markets.

>> See also: Smart forms of capital mobilization, building a strong financial foundation

2. The Standard 5-Step Process for Calling for Investment

Step 1: Create a Plan for Calling for Investment

In this step, the business needs to clearly define the goal of the fundraising, the amount of money needed, and how that capital will be used. Next, it’s necessary to build a detailed business plan that is feasible and demonstrates the company’s future profit potential and growth rate. At the same time, managers need to consider a long-term financial strategy and clarify the capital structure, including options for sharing equity or bonds.

Step 2: Find and Select Suitable Investors

Research and find potential investors who are a good fit for your field of operation and goals. Build a list of investors who might be interested and have the capacity to invest, then proceed to approach them through networking events, personal meetings, or online platforms.

Step 3: Prepare a Thorough Presentation for the Project

Create a persuasive presentation or pitch deck for investors with detailed information about the project, market opportunities, growth potential, and marketing strategy. Managers need to ensure the presentation reflects the company’s vision, mission, and core values. You should use images, charts, and specific data to illustrate important points to convince investors.

Step 4: Propose the Desired Capital Amount and Project Valuation

Determine the amount of capital the business needs and clarify how you will use that money. The desired capital must be appropriate for the project’s development needs, and the project valuation should be based on factors such as development potential, target market, and the team. In addition to these factors, managers need to consider how to propose the capital structure, including the equity percentage or loan conditions.

Step 5: Invest in the Project with Your Own Capital

Sometimes, to convince investors, leaders also need to be willing to invest their own capital to show the business’s commitment to the project. This can also ensure that you have a thorough consideration and understanding of your goals and are capable of managing capital effectively.

3. A Compilation of 10 Ways to Call for Investment for Businesses

3.1. Using Personal Capital

According to statistics, about 90% of startups begin with their own capital. This is because it is the most effective and least risky way to raise investment capital. Businesses can use personal capital from savings, personal assets, or previous business profits.

However, personal capital is often limited and insufficient to meet the development needs of the business. Therefore, the business will need a period of time to save and accumulate a sum of money to continue its operations. In return, you will not have to share equity or control of the business with other investors.

3.2. Raising Capital from Family and Friends

This is a common and effective way for small and medium-sized enterprises to raise investment capital. Family and friends often have trust and are willing to support the business, providing motivation for the initial startup phase. However, raising capital from family and friends can also lead to financial and emotional complications.

3.3. Raising Capital from Individual Investors

Seek out angel investors or angel funds interested in your field. These are individuals with idle capital who are looking to invest in promising businesses. Businesses can find angel investors through channels such as social media, websites, or business networking events.

3.4. Raising Investment Capital from Customers and Partners

A business can certainly collaborate with customers or strategic partners—those who need and are interested in the company’s products and services—to secure investment capital. This often occurs in business models involving partnerships or large purchase orders.

Some effective ways to raise capital include selling shares or offering products/services at preferential prices. Today, large corporations often have a business development fund that provides grants and loans to support small businesses.

3.5. Raising Investment Capital from the Community (Crowdfunding)

Crowdfunding is a method of raising capital from the online community through websites and applications like Kickstarter, Indiegogo, or GoFundMe. This is a broad approach where anyone can participate, helping businesses attract interest and funding from many people.

3.6. Raising Investment Capital by Taking Bank Loans

Taking a bank loan is a fairly common method of raising investment capital for large businesses with a long operating history and a reliable credit record. However, before borrowing from a bank, the business must ensure it has suitable collateral and the ability to repay the principal and interest on time.

For startups and newly established businesses, this method is difficult to apply because their operating and credit histories are not sufficient to build trust with banks. Therefore, to successfully raise investment capital from a bank, a business needs to meticulously prepare its loan application and meet the bank’s lending conditions. Additionally, the business must have a clear and feasible plan for using the capital to persuade the bank.

3.7. Raising Investment Capital through Venture Capital Funds

Venture capital (VC) funds are organizations that specialize in investing in startups with the goal of achieving high future returns. These funds typically require businesses to have high growth potential and to accept risk. This is a major source of startup funding, with several advantages such as:

• Large capital source, meeting the development needs of startups.
• They have experience and knowledge in the venture capital field.
• They support startups with various issues such as governance, marketing, and product/service development.

However, the business must be willing to share equity or ownership with the venture capital fund. Some reputable investment funds that businesses can consider include CyberAgent Ventures (CAV), Mekong Capital, Vina Capital Venture, Golden Gate Venture, IDG Venture, etc.

3.8. Participating in Capital Raising Programs

Participating in capital raising programs is an effective way for startups to access the necessary funds to grow their business. Managers need to prepare thoroughly and research these programs carefully to increase their chances of success.

Currently, there are many startup capital raising programs in Vietnam, such as startup competitions and programs supporting new businesses, including:

• Shark Tank Vietnam: A reality TV show connecting startups with investors.
• TechCrunch Disrupt: A global technology conference for startups.
• Startup Viet Challenge: A capital raising program for Vietnamese startups.
• Startup World Cup: A capital raising program for global startups.
• Google for Startups: A program providing financial and technical support for startups.

A notable advantage of these capital raising programs is the participation of experts in investment, business, and technology, allowing businesses to receive expert support for their development. Additionally, participating in these programs helps businesses enhance brand awareness and attract potential customers.

3.9. Raising Investment Capital by Issuing Shares

A share is a type of security that represents ownership of a small part of a company. Raising investment capital through shares is a way of finding investors by selling the company’s equity. Some conditions for a business to raise investment capital by issuing shares are:

• The business has a valid legal entity status.
• The business has stable business operations and the ability to pay dividends to investors.
• The business has a clear and feasible business development plan.

To successfully raise investment capital, businesses need to carefully prepare their documents and meet the conditions of the State Securities Commission. At the same time, businesses need to have a persuasive presentation to attract the interest of investors.

3.10. Raising capital from government agencies

Currently, government agencies have many financial support programs for businesses, including loan support programs, investment support, and support for the development of small and medium-sized enterprises. Specifically:

• Loan support programs: Government agencies provide preferential loans to businesses, including low-interest loans, interest-free loans, or loans with long repayment terms.
• Investment support programs: This is a form of direct investment in businesses or support for businesses to access investment capital from other investors.
• Small and medium-sized enterprise development support programs: These include forms of financial, training, and consulting support.

4. Secrets to successful fundraising

To succeed in raising investment capital for your business, here are some effective capital management secrets:

1. Create a detailed and meticulous fundraising plan: Develop a specific and detailed fundraising plan, ensuring you have considered all aspects of raising capital. From the required funds and how the capital will be used to equity sharing or loan conditions.
2. Research suitable investors: Survey and research the investors or investment organizations you want to approach. Understand their preferences, experience, and investment goals so you can tailor your message and fundraising approach accordingly.
3. Involve experts: Ensure you have a management team or advisors with professional knowledge and experience in your field. This will help build trust and demonstrate your ability to execute your business plan.
4. Always have a contingency plan: Business inevitably involves unexpected fluctuations during the fundraising process. Businesses need a contingency plan for situations like unsuccessful negotiations, changes in investment strategy, or other emergencies.

In addition, there are other important factors such as listening to feedback from investors, showing passion and commitment to your project, and building long-term relationships with those who have invested in your business.

5. Common questions investors ask

When raising capital, startups or businesses will face a series of questions from investors. This is not only how they assess the project’s potential but also how they verify the management capabilities of the founding team. Some common groups of questions include:

5.1 Questions about the product/service

Investors want to be sure that your product truly solves a significant problem, has clear differentiators, and provides a compelling reason for customers to choose it.

• What problem does your product solve in the market?
• Why do customers need this product instead of other options?
• What is your unique selling proposition (USP)?

5.2 Questions about the market

They need to see sufficient potential and favorable trends to ensure that your product will not only survive but also have the opportunity to explode in the future.

• What is the size of the target market (TAM, SAM, SOM)?
• Who is the main customer segment you want to conquer?
• Are market trends favorable for your product?

5.3 Questions about the business model

The goal is to verify that the revenue generation model is sustainable, the profitability is clear, and the expansion plan is feasible.

• What are the current sources of revenue?
• Are the gross margin and net profit sustainable?
• How do you plan to scale in the next 1–3 years?

5.4 Questions about the team

Investors believe that products can change, but the founding team is the key factor determining the success or failure of the business.

• Who is on the founding team, and what are their specific roles?
• What are the team’s strengths and weaknesses?
• Do you have any prior experience building a business or a startup?

5.5 Questions about financials & cash flow

These numbers show the true health of the business and its ability to sustain operations before a successful funding round.

• How much equity does the business currently have?
• How much money are you burning each month (burn rate)?
• When can the company reach its break-even point?

5.6 Questions about capital needs & use of funds

They need to know that the capital will be used transparently, for the right purposes, and will generate clear growth, not just to “burn cash.”

• How much capital do you want to raise?
• How will that capital be allocated to different activities (product, marketing, personnel, etc.)?
• When do you expect the next funding round to take place?

5.7 Questions about risks and response capabilities

Investors highly value a proactive approach to identifying risks and how you prepare scenarios to pivot or respond in a timely manner.

• What are the biggest risks the startup might face?
• Do you have a plan to deal with major competitors?
• If growth does not meet expectations, how will you pivot?

5.8 Questions about investment expectations

The most important thing is to find a balance: investors get a return and a clear exit strategy, while the startup retains the necessary motivation and control.

• What percentage of equity are you willing to give up for this capital?
• What level of involvement will the investor have: only providing capital or also participating in management?
• What is your exit plan – IPO, M&A, or selling back shares?

6. Common mistakes to avoid when fundraising

Fundraising is not just about convincing investors to pour in money; it’s also a process of demonstrating the company’s management capabilities, vision, and readiness. In reality, many failed deals are not due to a poor business model but stem from fundamental mistakes made during the fundraising process.

Valuing the business too high or too low

Business valuation that is unreasonable is one of the most common mistakes.

• Overvaluation can make investors doubt the feasibility, become reluctant to accept the risk, and refuse to participate.
• Undervaluation puts the business at a disadvantage, causing it to lose a large percentage of ownership and potentially affecting subsequent funding rounds.

Valuation should be based on financial data, growth potential, market standards, and the company’s stage of development, rather than just subjective expectations.

Not thoroughly preparing the fundraising documents and plan

One of the common mistakes in fundraising is when a business enters the process of working with investors without adequate preparation of documents and plans. Many cases only have an idea or a general description, lacking core materials like a pitch deck (a concise, visual presentation), a detailed business plan, a financial model, or a clear growth roadmap.

Hasty preparation makes it difficult for investors to assess the potential, risk level, and practical implementation capability of the business. At the same time, it also gives the impression that the founding team is not truly serious or ready for scaling.

A well-structured fundraising package not only helps to convey the business story convincingly but also demonstrates strategic thinking, management capabilities, and the company’s long-term commitment to investors.

Lack of transparency or exaggerating information

Hiding risks, embellishing figures, or exaggerating business results may offer short-term advantages but carries significant risks. When investors conduct due diligence, discrepancies will be easily discovered, directly affecting the company’s reputation and future fundraising ability. Transparency, honesty, and consistency are key factors in building lasting trust.

Not having a risk contingency plan

Many businesses focus on presenting positive growth scenarios but overlook adverse situations such as market fluctuations, revenue not meeting expectations, costs rising, or policy changes. 

From an investor’s perspective, a good business plan not only demonstrates growth potential but also needs to show how the company controls risks and minimizes losses. Without a clear contingency plan, a business is often perceived as overly optimistic, lacking management experience, and not ready for sustainable growth.

Conversely, proactively identifying risks and building appropriate response plans will enhance credibility, while also demonstrating that the business understands the real challenges of expansion and capital utilization.

Ineffective negotiation

Mistakes in negotiation often stem from not fully understanding investment terms, being too rigid, or conversely, conceding too much. This can lead to:

• Loss of control over the business
• Unfavorable binding terms
• Future conflicts of interest

An effective negotiation should be based on thorough preparation, a clear understanding of the company’s core value, and a focus on a long-term partnership, rather than just the amount of money received.

7. Download sample investment proposal templates

• Download: [1OFFICE] Investment Proposal Template for Businesses 1.pptx

Please note that each business may have different needs for a capital call, so you should customize the template to fit your specific goals and requirements. An investment proposal template will include the following main sections:

• Download: [1OFFICE] Investment Proposal Template for Entertainment Company.pptx

Cover Page: Introduce the business and the purpose of the capital call.

About the Company: Introduce the business idea, market, products/services, team, and the company’s development plan.

• Download: [1OFFICE] Investment Proposal Template for Agricultural Company.pptx

Financial Situation: Present the company’s current financial situation and future financial plans.

Use of Funds Plan: Explain how the investment capital will be used.

• Download: [1OFFICE] Investment Proposal Template for Sports Company.pptx

Q&A: Suggest some frequently asked questions during a capital call.

• Download: [1OFFICE] Investment Proposal Template for Businesses.pptx

8. Managing investment capital after a successful fundraising

After a successful capital call, the biggest challenge for a business is not having more resources, but using that capital for the right purposes, in line with commitments, and to create sustainable value. Effective capital management is also a decisive factor in the company’s long-term credibility with investors.

• Use capital effectively according to the committed plan: The business must allocate and use capital for the purposes presented in the investment proposal, prioritizing items that create core value. Any major budget adjustments should have a clear basis and be discussed with investors to avoid losing trust.
• Manage investor relations: Maintain a regular reporting mechanism (monthly/quarterly) on the financial situation, capital usage progress, and business results. Proactive updates, even when facing difficulties, help build long-term trust with investors.
• Corporate governance and commitment compliance: After fundraising, the business needs to enhance governance standards, internal controls, and comply with the terms of the investment agreement, such as supervision rights, voting rights, and committed metrics (KPIs, milestones).
• Prepare for subsequent funding rounds: Closely monitor the efficiency of capital use, record growth metrics, and perfect the financial and legal reporting systems. This is a crucial foundation for the business to approach subsequent funding rounds more favorably.

9. Frequently Asked Questions about Investment Fundraising

How long does a typical funding round take?

On average, a funding round lasts from 3 to 6 months. This period includes several stages: preparing documents (Pitch deck, Data room), approaching investors, project appraisal (Due Diligence), and completing legal procedures for disbursement.

What is the most important thing a startup needs to prove to successfully raise a seed round?

Investors in this round focus on the people and potential. You need to prove that the team has the ability to execute, the idea is highly feasible, and most importantly, that you have Traction (data proving user/market acceptance of the prototype).

How do you value a company with no revenue?

When there is no revenue, valuation is often based on comparative methods (with similar startups), the Scorecard method (scoring the team, market size), or negotiation based on the capital needed to reach the next major milestone.

How is Crowdfunding different from raising capital from a VC fund?

• Crowdfunding raises small amounts of money from a large number of people, usually in exchange for early products or gifts, suitable for consumer products.
• A VC fund invests large amounts of capital in exchange for equity, along with support in governance and networking to scale quickly.

What is the solution for professional data management when investors conduct due diligence?

Businesses should use centralized management platforms like 1Office. The system helps you digitize all legal documents, financial reports, and actual operational KPIs transparently. Having a well-organized “Data room” on 1Office helps startups score points for professionalism and shortens the investor’s due diligence period.

10. Conclusion

Raising investment capital is a complex process that requires meticulousness and professionalism to achieve the desired success. Hopefully, through this article, managers have found the right direction and have a better understanding of the forms of capital raising to invest in their businesses. We wish your business success