girl holding american dollar bills Capital funding is the process of lending the investors’ money into a business that invests that money into other parts of the business. These investors can be:·  States·  Private investors·  Private companies·  Large-scale companies·  Non-Government organizations·  FoundationsBusinesses that receive money can then invest the same money in some things like new projects, real estate, or equipment and then take the additional revenue. Businesses do not have to take capital directly with money but can also use leasing, credit, and other types of loans.The history of capital fundingThe first occurrence of capital funding was in 1939-1945, where rich families like Rockefellers started to land money to the companies. At that time, money was lent only to private companies, and rarely to individuals.The heat of capital funding was in 1946. When Georges Doriot made the first venture capital company – American Research, and Development Corporation (ARDC). ARDC became the first company to raise capital by a third party, not by the rich.ARDC reached its peak in 1957. By investing in Digital Equipment Corporation (DEC), achieving an ROI of 120 000% (1200x of the initial investment).The first step towards establishing capital funding as a profession was an “Act of Small Business Investments” in 1958. After which companies could register as small business investment companies.The capital funding business continued to grow to 1974. Where the stock market crash occurred. After which came growth until the 1990s. The ROI was small at first, but with the increasing number of online businesses, investors saw the potential and rushed to invest in .com companies, leading to the 1994 stock market crash. How do investors return the invested money?Investors return the invested money in the form of shares, dividends, or interest. For example, an investor can borrow $ 200,000 in exchange for 20% ownership, thus increasing the company’s valuation.If you decide to repay the loan through interest, it usually ranges from 4% to 10%. If you fail to repay the borrowed money, investors can take full ownership of your companyWhat is the most common type of capital fundingThe most common types of capital funding are loans from parents or banks, where loans from angel investors and venture capital companies are totaling only 2%. The most common form of capital funding for small businesses is credit card payments, and for large corporations, government benefits, or equity.Is capital funding good for startups?For startups and small businesses, taking a loan can be a very dangerous thing to do. The founders are often taking much larger sums of money than needed. Unable to repay the debt they took, they fall into debt bondage, and investors take full ownership of the company.The procedure of capital fundingThe most difficult part of the capital funding procedure is finding a good investor who, with the appropriate knowledge, can make a lot of money and help the people around him. Investors are often interested only in the valuation of your company, not paying attention to the quality of the products you sell.After choosing the right investor, you need to choose the offer that is in line with your goals and ambitions. After you choose an offer, you’ll need to make a proposal to describe why you are the best candidate for the investment and how you can return the loan in the shortest period.Keep in mind that you need to create a strong relationship with investors! Without a strong connection with investors and the feeling of mutual trust, there is a 99% chance that your proposal will not pass. How to find a false capital funding investorYou can spot a fake capital funding investor in these few steps:·  If an investor offers you huge amounts of money, much larger than your requested offer, that investor is a 100% fraudster who wants to take your company.·  If an investor asks you to pay a certain amount of money for additional costs, he is likely a fraudster·  If the offer is too good to be true – it probably is·  If an investor forces you to make a decision quickly, he’s 100% a scammer·  If the investor has great charm and is honey mouthed, this is also a strong signal that he is a scammer·  If people you don’t know are constantly sending you text messages or emails, there is a great probability that they are well-networked thievesHow to protect against capital funding scams·  Always check the investor’s background, as it may be false·  Ignore every type of message and email that comes from the people you don’t know·  If you’re a beginner, it’s always wise to consult a more experienced person who already had some experiences with scammersHow can I provide capital funding to businesses?If you want to provide capital funding to companies that cannot trade stocks, the best option is to create a limited partnership (LP) where you will make investment decisions together with the partners. You can also use mutual capital to invest, in exchange for certain equity.You’ll need to keep the whole process of capital funding in 3 series, series A, where you have to find suitable, promising companies in which to invest, series B, where the company wants to grow and expand into the market, and series C where the business (hopefully) succeeded and achieves significant profit.Conclusion: The process of giving the money to businesses or a person as a loan is called capital funding. In most cases, the given money must be returned under equity or debt (financing). Capital funding had its ups and downs throughout history, but it has remained a stable source of income with a long-term gain. The number of capital funding companies is growing and is expected to jump to $ 350 billion by 2023.