（#founder #entrepreneur #business）Funding for Entrepreneurs: Is $30,000. the Target Amount for Starting a Business!?

A Fundraising Guide to Turning "I Want to Do This!" into Reality:
How to Raise Funds Even for Beginners

"I want to start a business with an idea I've nurtured for a long time!" "I want to open a new store!"
When envisioning such exciting dreams, the first major hurdle many people face
is the issue of "funding (money)."

"I want to start a business, but my savings alone are far from enough..."
"I am really scared of taking on debt, but realistically, how should I secure the money?"
"What if I run out of funds halfway through...?"
When facing a new challenge, it is completely natural to have endless anxieties and questions about money.

Especially when starting a business or expanding for the first time,
it is hard to see the big picture of how much money is needed and what funding options are available, which often makes people hesitate even more.

Although it is referred to simply as "fundraising," there are actually various options available.

While using your own funds (self-funding) as a base is fundamental,
methods to supplement the shortfall have expanded significantly over time. These include not only loans (borrowing) from banks or government financial institutions,
but also utilizing non-repayable subsidies and grants, or crowdfunding to collect support broadly from fans and backers.

Each method has its own pros and cons in terms of
"time required for preparation," "difficulty of screening," and "costs and risks."
The key to success is choosing the optimal combination tailored to your business phase, industry, and the required amount.

In this guide, whether you are currently preparing to launch a business,
or already running one but struggling with daily cash flow or the next phase, we will explain the "Basics of Fundraising" in a clear and detailed manner—covering everything from basic knowledge to specific methods and strategies to minimize risk.

Let's organize your money plan together to take a solid step forward and prevent your dream from remaining just a dream!

How Do You Deal with the Initial Money to Start a Business?

When starting a business, the costs that always arise include
"the upfront money (initial costs)" and "money to operate (operating expenses)."
There are three main ways to prepare these.

• Self-Funding (Personal Savings)

  This is the simplest and lowest-risk method. You don't need to pay interest.

  However, covering the full amount with your own money takes time, and there is a risk of putting a strain on your personal life if something unexpected happens.

• Subsidies and Grants

  This is money provided by national or local governments to support new businesses.
  The biggest advantage is that "you don't have to pay it back."

  However, the screening process is strict, and the actual money often arrives "after you conduct the business and submit receipts," so you need to plan carefully to secure your initial upfront cash.

• Loans (Borrowing from Banks, etc.)

  This is a method of borrowing money from banks, credit unions, or public financial institutions.

  You might feel hesitant about the word "debt," but it is very common as an "investment" to accelerate your business.

How to Get a Loan: Key Points for Passing the Screening

People often think that "the bank will lend money right away if you just go there," but preparation is actually crucial. Let's look at the general process of getting a loan.

The Loan Process

• Create a Business Plan

  Document "what kind of business it is, how it will generate profit, and how it will be repaid."

• Consultation and Application

  Visit a counter such as a public financial institution to consult.

• Interview and Screening

  Have an interview with the representative to convey your passion for the business and the realism of your plan.

• Loan Disbursement

  If you pass the screening, the money will be transferred to your designated account.

Regarding "how much money you can receive (borrow)," it varies depending on the industry and the amount of personal funds you have prepared,
but generally, a guideline is said to be "about 2 to 3 times your personal funds."

For example, if you have prepared $18,300 (or around 3 million yen) on your own,
the idea is that you may potentially be able to borrow around $36,620 to $54,930 (6 million to 9 million yen).

Fundraising Options: 5 Methods You Should Know

Here, let's look at some representative options for the different types of fundraising available.

1. Loans from the Japan Finance Corporation (JFC)

For entrepreneurs aiming to launch a new business or start an independent venture, the first and biggest hurdle is the
"difficulty of raising funds due to a lack of a track record (financial statements)."

General private banks (such as city banks and regional banks)
take a very cautious stance toward making independent loans to early-stage companies that lack a past track record, sufficient collateral, or guarantors.

Government-affiliated financial institutions, commonly known as "Koko" (JFC), were established with the purpose of rescuing early-stage businesses from financial distress, revitalizing the economy, and creating new jobs.

・Loans are available even at startup with zero track record
Unlike private financial institutions, JFC has a policy goal of "startup support."
Therefore, even at a time when past financial statements or sales track records do not exist (from before opening to shortly after founding), they will actively conduct screenings as long as you have a highly feasible business plan and a certain level of preparation.

・Serves as a stepping stone to gain "credit" from private banks
By building a track record of loans from JFC and making repayments consistently without delay, you stack up a "credit history" in the financial industry.
The fact that you passed JFC's screening functions as a form of credit guarantee, providing a significant side benefit that makes it easier to secure additional loans from local private banks or credit unions when expanding your business in the future.

In this way, JFC serves not merely as a "place that lends money,"
but as the "safest and most reliable first choice for fundraising" to smoothly launch an early-stage business that would be difficult to scale with personal funds alone and put it on a sustainable operating track.

2. Proper Loans from Banks and Credit Unions

"Proper loans" refer to a method of direct lending where private financial institutions (such as banks and credit unions) directly assume all default risk
without using public guarantees like Credit Guarantee Corporations.

Because 100% of the risk falls on the financial institution, the screening bar is extremely high.

・Enables building a "deep relationship of trust" with financial institutions

Being able to secure a proper loan
means receiving the highest stamp of approval from that financial institution, acknowledging that "you have high creditworthiness and business viability to repay the full amount independently, even without backup from a guarantee institution."
This fosters a strong bond of trust as a true business partner, going beyond a simple "lender and borrower" relationship.

It is not easy to suddenly receive a proper loan during the startup phase or when your track record is thin.

First, build a reliable repayment history through JFC or guaranteed loans,
and regularly maintain communication and financial reporting with local credit unions or regional banks. This will pave the way toward future proper loans.
Once you establish this track record, it will become a powerful financial base supporting your business's rapid growth.

3. Crowdfunding

This is a method of asking the general public for support on the internet by calling out, "Please support my dream!" It allows you to build a fan base at the same time.

Through dedicated online platforms,
you share your ideas and projects, such as "I want to create this kind of product!" or "I want to open a new store in this town!"
and widely collect small amounts of funds from an unspecified number of general people (supporters) who sympathize with the concept.

Setting itself apart from traditional finance-driven fundraising like "borrowing from banks" or "receiving investments from investors,"
it delivers stories and passion directly over the Web as "empathy/support-driven fundraising," making it a powerful choice for recent startups and new ventures.

On the other hand, "thorough preparation and PR activities to evoke empathy"—such as creating an attractive page and actively posting on social media—are essential,
and attention must be paid to platform fees (around 10% to 20% of the funds raised).

However, for business operators with a passionate story and unique strengths,
it is a very inspiring fundraising method that can launch a business with unprecedented speed and reach.

・Achieve "Fundraising" and "Marketing (Building a Fan Base)" Simultaneously
Beyond merely collecting money, it provides a powerful promotional (PR) effect by letting the world know about your product or store before it even opens.
Supporters who resonate with your passion prior to launch are highly likely to become "core customers" who continue to use your service and spread the word on social media after opening.

・Test Market Demand to Confirm Needs
When faced with the worry, "Will customers actually buy this if released to the market?", it can be used as a preliminary test.
If substantial support is gathered, it serves as objective proof (evidence) that "there is demand for this business,"
creating a strong chain reaction where leveraging that track record makes it easier to approach banks and investors for further loans or equity investment.

4. Angel Investors and VCs (Venture Capital)

This is a method of receiving investment (in the form of buying shares) for high-potential businesses.
There is no obligation to repay, but there will be advice and involvement in management.

This is a method of securing funds directly through "equity investment" from individual investors (angel investors) or specialized investment firms (venture capital: VC)
for innovative businesses with high future growth potential or unprecedented new business models.

Unlike loans (borrowing) where you "borrow money" from a bank,
a key feature of this scheme is receiving funds by having the future value of the business (shares) evaluated, effectively having them "buy company shares (acquire ownership stake)."
Especially for startup companies aiming for rapid expansion along a J-curve, this serves as a powerful engine to accelerate the business.

・Obtain "Smart Money (Management Support)" That Brings Value Beyond Just Capital
Angel investors (such as former successful entrepreneurs) and VCs do not merely provide funds.
They offer multi-faceted support with resources necessary for business growth, such as their abundant management know-how, strong industry networks, alliance opportunities with major corporations, and introductions to top-tier talent.
Being able to grow the business at a speed unreachable alone can be said to be the greatest appeal of receiving equity investment.

・Involvement in Management and Governance as Shareholders are Required
While there is no obligation to repay, investors hold a portion of company ownership as "shareholders."
Consequently, a certain level of advice and intervention in management occurs, such as guidance on business policies or participation in the board of directors.
If the founder's shareholding ratio (ownership stake) drops too low, there is a risk of losing management control in the future (dilution risk). Therefore, a detailed capital policy regarding the valuation at which you issue what percentage of shares is essential.

5. Factoring (Early Monetization of Accounts Receivable)

This is a method of selling accounts receivable (money scheduled to come in later) to a specialized company to convert it into cash earlier than the due date.

Factoring is
a fundraising method of converting "accounts receivable (uncollected invoices/receivables)" held against business partners (debtors) into cash (hands-on funds) before the original payment due date
by selling (assigning) them to a specialized factoring company.

Because it is not a matter of "borrowing money (loans),"
but a sales transaction of "having an asset (receivable) scheduled to come in the future purchased,"
a major feature is that you can improve cash flow without increasing liabilities on the balance sheet (B/S).

・Avoid the Risk of Uncollectible Accounts (Insolvency Risk)
In the unlikely event that a business partner goes bankrupt after the accounts receivable are purchased and the funds become uncollectible,
the mainstream contracts (non-recourse contracts) generally do not require your company to compensate for or repay the loss.
This provides a safety benefit where you can "transfer (hedge) the risk of uncollectible accounts receivable to the factoring company" simultaneously with fundraising.

In this way, factoring holds the unique advantage of "immediately increasing cash on hand without borrowing,"
making it a reassuring fundraising option, especially for business operators in BtoB (business-to-business) transactions who face long payment terms (period until payment) and worry about the risk of profitable insolvency.

What is "Factoring," a Powerful Ally for Business Owners?

Now, what is most frightening while running a business is "profitable insolvency" (insolvency despite turning a profit).

This is a situation where "sales are steadily increasing, but because payment from clients is months away, you cannot pay this month's salaries or rent!"

For business owners and corporate entities facing this issue, a service called "Factoring" is gaining attention.

The Mechanism of Factoring Explained Simply

Simply put, factoring is a "purchasing service for accounts receivable (invoices)."

Normally, even after completing work and sending an invoice, the money comes in a month or two later, right?

By using factoring, you can convert that "unreceived money" into cash "today or tomorrow" minus a fee.

Why is Factoring Chosen?

• It is Not Debt

  It is simply selling "your own asset (invoice)," so it does not increase your liabilities.

• Fast Screening Process

  It is overwhelmingly faster than bank loans, providing cash as fast as the same day.

• No Impact on Credit Information

  Because it is not a loan, it will not negatively affect future borrowing from banks.

• Fund Disbursement

  If you pass the screening, the money will be transferred to your designated account.

Capital Investment (Startup Costs) and Operating Funds

The funds required to open a business can be broadly categorized into "Capital Investment (Startup Costs)" and "Operating Funds."
Accurately assessing these two is the single most important factor in preventing the risk of bankruptcy due to cash shortages. We will clearly explain the specific simulation steps and calculation methods.

We will clearly explain the specific simulation steps and calculation methods.

Understanding the Meaning of the Two Types of Funds

• Capital Investment (Startup Costs)

  Initial investment to get to the "starting line" of launching a business.

• Operating Funds

  "Monthly living and maintenance expenses" until sales stabilize.
  Preparing at least 3 to 6 months' worth is recommended.

Specific Calculation Simulation (Example: Opening a Cafe)

To get a practical idea, let's look at a trial calculation model for opening a small cafe.

Calculating Capital Investment (Initial Investment)

These are one-time expenses required to give shape to the shop or business.

Item	Specific Details	Estimated Cost (Example)
Initial Property Contract Expenses	Security deposits, key money, brokerage fees, etc.	$9,160 (1.5 million yen)
Interior and Exterior Construction Costs	Design, construction, utility work	$18,300 (3 million yen)
Kitchen Equipment and Supplies	Equipment, tables, POS system, fixtures	$9,160 (1.5 million yen)
Initial Inventory Purchases	Ingredients, drinks, packaging materials, etc.	$1,830 (300,000 yen)
Advertising and Promotional Expenses	Website creation, flyers, signage installation	$1,220 (200,000 yen)
Total Capital Investment		$39,670 (6.5 million yen)

Calculating Operating Funds (Monthly Fixed Expenses)

Grasp the money that goes out every month (fixed costs) even if sales are "zero."

Monthly Expense Item	Estimated Cost (Monthly Example)
Rent	$1,220 (200,000 yen)
Personnel Costs (Self + Part-time)	$1,830 (300,000 yen)
Utilities and Communication Expenses	$488 (80,000 yen)
Sales Promotion, Miscellaneous Expenses, Loan Repayment, etc.	$732 (120,000 yen)
1-Month Operating Funds	$4,272 (700,000 yen)

Determine the Total Required Funds and Create a "Funding Plan"

By adding up the above capital investment and operating funds, the overall amount you need to prepare becomes clear.

・Capital Investment: $39,670 (6.5 million yen)
・Working Capital (6 Months): $25,630 (4.2 million yen)
・Total Required Funds: $65,300 (10.7 million yen)

Subtracting your available "personal funds" from this total gives you the target amount that needs to be raised through loans or other means.

・Personal Funds: $18,300 (3 million yen) (Paid out of pocket)
・Fundraising Target Amount (Loans, etc.): $46,700 (7.7 million yen) (Borrowed from JFC, banks, etc.)

Estimate Operating Funds Based on the "Worst-Case Scenario"

It is rare for sales to increase according to plan right from the start of business.
Having enough working capital to avoid bankruptcy even with "zero sales for the first 3 months" will give you peace of mind.

Tips for Writing a "Business Plan" That Passes Loan Screenings Easily

Here, we explain the real-world know-how for formulating a business plan based on the realistic perspective of "what loan officers (and head office analysts) look for before approving a request"
in actual loan screening settings (such as JFC or guaranteed loans from private financial institutions).

Screening officers do not lend money to "dreams."
They lend money to "logical repeatability" and the "certainty of repayment sources (cash flow)."

Create a Structure That Makes It Easy for the Loan Officer to Write the Approval Document

While financial institution representatives are on your side, they are also writers who must compose "approval documents to persuade their superiors and the head office credit department."
Providing persuasive logic at a level where the representative can copy and paste directly into the approval document will dramatically boost your approval rate.

• Pairing Quantitative Data (Numbers) with Qualitative Data (Evidence)

  Instead of saying "there is demand among the target demographic,"
  present numbers from official statistics (such as census data or RESAS) like "the number of households within a 1km radius of the store is X ten thousand, of which the target demographic (families in their 30s) accounts for X%."

• Consistency in "Why Now, Why This Location, and Why You"

  The risk level is night and day between an inexperienced person starting a restaurant after retirement
  and someone with 10 years of industry experience as a store manager who brings existing regular customers.

  Create a story that directly links your "competitive advantage (strengths)" with "your career history (founder's background)."

Break Down and Disclose the "Basis" of Your Profit Plan (P/L)

The issue most heavily scrutinized in screenings is overly optimistic sales forecasts.

Wishful thinking such as "it would be nice to sell this much" is spotted in an instant.
Sales logic must always be broken down into smallest units: "Unit Price × Quantity."

• Bad Example

  "Monthly Sales $18,300 (3 million yen) ($610/day × 30 days)"

• Example That Passes in Practice
  (For a physical store business)

  Average Customer Spend
  Lunch $7.30 (1,200 yen) / Dinner $24.40 (4,000 yen)

  Number of Seats & Turnover Rate
  20 seats (Lunch occupancy rate 70% = 14 people × 2 turns = 28 people / Dinner occupancy rate 50% = 10 people × 1.5 turns = 15 people)

  Estimated Daily Sales
  Lunch $205 (33,600 yen) + Dinner $366 (60,000 yen) = $571 (93,600 yen)

  Monthly Sales (Operating 25 Days)
  Approx. $14,280 (2.34 million yen)
  (Considering lack of awareness during the first 3 months of opening, calculated at 80% of this, which is $11,420 (1.87 million yen))

Preparing 3 patterns of sales forecasts ("Optimistic, Standard, Pessimistic")
and proving with numbers that "loan repayments (principal + interest) will not be delayed even in a pessimistic scenario" will greatly increase your evaluation by the screening team.

Clarify the Use of "Working Capital" and Attach a Cash Flow Statement

Rough estimates such as "I want to borrow $30,515 (5 million yen) for now" are strictly prohibited.

・Capital Investment Expenses
Attaching quotation documents (evidence) is mandatory. Ensure figures match down to the $0.01 (1 yen) level.

・Operating Funds
Explain the cash collection cycle of "what money will be spent on what, and when it will be recovered,"
(the gap between the collection terms for accounts receivable and the payment terms for accounts payable).

Particularly in BtoB (business-to-business) or industries where sales on credit and accounts receivable occur, a "profitable insolvency risk" arises where money comes in two months later even if sales are booked.
To prevent this,
attaching a "cash flow forecast" for at least 6 months to 1 year will build trust, proving that "this business owner can manage cash flow effectively."

Prepare Answers for Credit Risk (Collateral Protection and Personal Funds)

What financial institutions fear most is "default (bankruptcy / uncollectible funds)."
Prepare answers in advance for the risks and concerns that screening officers might hold.

• Check for "Show Money" in Personal Funds

  Personal funds are evaluated not merely by the amount in the bank account, but by "how they were saved (the preparation process)."

  "Show money" deposited in a lump sum right before the screening, such as hidden cash savings, will be spotted immediately.
  Present your bank passbook history to demonstrate the process of saving steadily every month.

• Exit Strategy Line and Risk Hedging (Plan B)

  "Even if sales drop to 50% of the plan, we can cut labor costs by X amount and switch to e-commerce sales, enabling us to hold out for X months."

  Writing specific recovery measures for when such risks occur will earn high praise for your crisis management ability as a business owner.

A Certificate Proving Repayment Ability

A business plan that passes a loan screening
is not merely a "passionate presentation document,"
but a "certificate proving repayment ability based on objective data."

・Break down and explain the basis for all numbers
・Demonstrate cash flow that can repay loans even under a pessimistic scenario
・Provide sufficient evidence so the representative can convince their superior

By thoroughly incorporating these three points into your plan, your approval rate in loan screenings will increase significantly.

Choose the Fundraising Method That Suits You Best

To start or continue a business, keeping the "money flow (cash flow)" moving is more important than anything else.

• At the start, build a foundation using "personal funds" and "public loans."
• When faced with sudden expenses or the need for bridging funds while waiting for payments, wisely utilize "factoring."

In this way, having multiple methods according to the situation is the key to stable business operations.

It would be a great shame if your wonderful business idea came to a halt due to financial difficulties.
Why not take that first step starting with what you can do today?

Whichever method you choose, being prepared to clearly explain "why that money is necessary" will help ensure that obtaining loans or preparing funds proceeds smoothly.