Most people are trained to climb a corporate ladder. Entrepreneurs, however, create their own. The question is: how do they fund that climb?

One of the biggest lessons Rich dad highlighted was the difference between a corporate career and entrepreneurship. A corporate employee looks up and sees the next rung of the ladder; an entrepreneur builds a ladder entirely of their own making. But to build, you need resources—money.

There are four primary sources entrepreneurs look to when raising capital:

1. Friends & Family – These are people who care about you and may fund you blindly. While it’s common, experienced entrepreneurs often warn against it—it can keep people dependent or damage relationships. Instead of giving handouts, the lesson is to teach resourcefulness.
   
    Example: Instead of paying Robert and Mike wages as kids, Rich Dad encouraged them to spot opportunities. One story involved old comic books being discarded. Robert and Mike turned them into a mini-library that kids rented. That small project was their first lesson in raising capital through creativity instead of relying on others.
   

2. Angel Investors – Wealthy individuals with a passion for backing young businesses. Most major cities now have angel groups offering both capital and advice. They help entrepreneurs grow and keep cities thriving. With the internet, even small towns can access this ecosystem.
   

3. Private Investors – Accredited individuals who put money into private companies. These people face higher risks but also higher potential rewards. Education and experience are essential before going down this route.
   

4. Public Investors – Everyday people investing through the stock market. Because it’s regulated, the risks are lower than private deals, but investors also have less control.
   

The key takeaway? Entrepreneurs must understand where money comes from and which source matches their business stage.

Key Lessons :

• Employees climb ladders; entrepreneurs build their own.
  

• Money can come from 4 main sources: friends/family, angels, private investors, or public markets.
  

• Angel groups keep local entrepreneurship alive and can revive small towns.
  

• Private investing offers big opportunities—but only for those with education and experience.
  

• Public markets give access to the masses but remove control.
  

Actionable Steps :

• Research local angel networks in your city.
  

• Start identifying whether your idea would suit private investment or public growth.
  

• Build financial literacy before seeking investors—it increases your credibility.
  

In short:

Entrepreneurs raise money in four ways:

• Friends & Family – common but risky.
  

• Angels – wealthy individuals who back ideas and mentor founders.
  

• Private Investors – accredited players with big stakes.
  

• Public Investors – the stock market, regulated but less control.
  

The earlier you understand these doors, the better decisions you’ll make when opportunity comes knocking.

📚 Book Buying Hook

If this sparks your interest, I recommend picking up Rich Dad’s Guide to Investing. This is a good book and I learnt a lot of new lessons from it. It dives deeper into how entrepreneurs think about money, how different investors operate, and why understanding capital sources is critical. Click the link below to get it 👇:

Disclaimer:

This newsletter is for educational purposes only. It’s not financial advice. I’m not telling you to buy or avoid any IPOs. Always do your own research before making investment decisions.

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Free Bonus: The 4 Funding Sources Cheat Sheet

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