Two Types of Capital| Intellectual Capital | Financial Capital [1 of 2 Posts]

raising capital - young- entrepreneursIn the game of business, start-up entrepreneurs tend to get overwhelmed with the first phase of social pressures, lack of capital, and psychological noise that tends to shepherd the mind. We are all prone to these noises and must learn early on in our careers to master the art of tuning them out.  You can call this the art of “Selective Hearing”, or “Noise Canceling”.

In regards to lack of initial capital, you need to understand that your mind is your most important tool in overcoming this challenge. There are two types of capital that start up entrepreneurs need to learn to leverage off of.


MW-AU118_ts_art_MG_20120830135556Intellectual Capital

This is in fact your most important resource and leveraging tool.  You need to define your strengths and weaknesses earlier on in your life, and manipulate them.  There are times when you will subconsciously lie to yourself and take on, or even try to master other traits and educational fields.  The truth is that there is a significant amount of competition in the world with regards to business.   Therefore, spending the time and the energy mastering a craft that you are not passionate about and where there is a significant amount of competition, or over saturation, will defeat you emotionally.  Most of my clients and friends that are attorneys and doctors will validate this.  After vesting a significant amount of time and financial capital via student loans in entering industries that there significant others pressured them into to, they were forced into spending their lives working and studying crafts that they despise and hate.  Don’t let this be you.

Wherever you are in you start-up entrepreneurship career, you need to define your strengths and run with them. Your weaknesses, whether they are accounting, math, economics, financial modeling, paperwork, setting goals, time management, cold calling, the list goes on…   Can all be outsourced and passed on to others. Learn to master your strengths and leverage your weaknesses!


Media-start-upFinancial Capital

With regards to financial capital and start up financing for ventures.  You need to concentrate on the strengths and the resources that you currently have.  Companies are NOT built overnight. It takes time, patience, and self discipline to start up a venture. There are a significant amount of resources out in the internet that will guide you in the direction or even spark up ideas on how to raise initial start-up capital.  You just have to pay your dues, and start searching.  In economics the word capital accumulation is heavily professed.  What this means is that you need to have the mental discipline to SAVE.  America is a country built on consumption, consumerism, materialism, and the RAT RACE.  FUCK THAT SHIT!!!!    If you are starting a venture from the ground up, take the time and the energy to understand the initial financing requirements to get your baby off the ground. Ask yourself, “What amount of initial capital will I need to get this baby running?”   Once you have honestly figured out the initial investment, the steps are simple;

1- You need to add another 25%-30% to the initial investment figure for unexpected spillover and costs.

2- Start saving!! If you’re lucky enough to have enough disposable income to save 100% of the initial investment, than by all means DO IT!  This will give you 100% control of your company and will free you from the psychological duress and challenges of having business partners or investors.

3- If #2 does not work for you and you cannot save 100% of the initial investment do to time constraints. Than save about 50% of the initial start up investment, and go seek investors for the other half. The 50% of capital that you have accumulated and saved will give you enough skin in the game and will alleviate 50% of the risk for the potential investor.

4- When seeking investors or partners; [Friends, Family, Others] you need to disclose what type of investment opportunities that you are offering.  Such as;

  1. Whether they will be an operating partner or just an investor
  2. ROI [Return of investment]
  3. Percentage of company ownership [If Any]


To be continued….


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