How to finance Your business

2 Major Ways

• Equity financing – investors exchange money for ownership stake in the form of shares.
  • Angel Investing – using their own money
  • Capital venture – not using their own money
  • Advantages
    • Lesser risk than debt financing
    • low credit score
    • higher cash flow
  • Disadvantages
    • Loss of control
    • Potential Conflict

• Debt financing – company takes up a loan and pay back the principal amount with interest on a later date.
  • Advantages
    • Retain Control
    • Tax advantages
  • Disadvantages
    • High Credit rating
    • Collateral agreement

Other Way

• Crowdfunding – sharing of business concept to the market to attract them for investment purposes
• business grant or start-up grants – a given amount of money for an amount of capital raise
• bootstrapping – self financing option

Reference

Business Owner’s PlayBook. (n.d.). Advantages vs Disadvantages of Debt Financing. Retrieved from https://www.thehartford.com/business-insurance/strategy/business-financing/debt-financing

Jim W. (2019, Mar 4). The advantages and disadvantages of debt financing and equity financing.

Rachel B-G. (2018, June 19). How to decide between pitching to a venture capitalist vs angel investor? Retrieved from https://www.patriotsoftware.com/blog/accounting/venture-capitalist-vs-angel-investor/