Raising Finance

In: Business and Management

Submitted By manwithballs
Words 430
Pages 2
Launching a new business requires much preparation and of course money. First phase to start or expand your business - is to identify ways of raising finance, find one that is most compatible with your needs, and then meet the given criteria of the investor or bank.
There are different types of financing that will enable an entrepreneur to raise capital for their new business:
1)Personal funding
Using personal finances is one of the first sources that an entrepreneur may consider using when they decide to raise capital for their new business. Money can be obtained from personal checking and savings accounts, credit cards, and retirement accounts. In addition, equity can be collected from the sale of real estate properties, vehicles, recreational equipment, and even rare collectables. The advantage of this type of financing is that you do not have to borrow from the bank, but if you are a beginner Entrepreneur you will hardly have enough of own funds to open a big business.
2) Equity financing. This is a type of financing is essentially an exchange of money for a piece of ownership in a new business. This type of financing can usually be provided by venture capitalists and angel investors. An advantage of using equity financing as a way to raise capital is that the new business owner can pay back the loaned amount throughout a fixed duration of time. In addition, the new business owner can focus on making their product profitable rather than worrying about paying back the investors immediately.
One possible disadvantage of utilizing equity financing to raise capital is that the new business owner may lose partial or complete autonomy over their new business.
3) Angel investors and venture capitalists
New business owners can also raise capital from angel investors and venture capitalists through equity financing. By investing in the equity of a business,…...

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