Business Essay

705 WordsOct 2, 20123 Pages
Seed and Early Stage Business Funding Options: • When starting a business, the most common and generally easiest business funding method is Self-Funding which involves the startup getting self-funded by the founder(s). This is the first option because often your best chance of getting enough capital to fund your business (particularly in its earliest stages) is by funding it yourself. Read more information on Self-Funding. o Funding from the founders Close Personal Network (commonly referred to as the 3F’s) is also a common funding method and often combined with the founders funds to provide the required start-up capital. • Sweat Equity (as an alternative to business funding). Instead of paying cash for a particular resource or service, equity in the business is provided as compensation for the time and effort provided by the individual or service provider. This might be a suitable alternative to funding in cases where that service is a major component of starting up or growing the business (for example website or tech development) and funding would otherwise be needed to pay for the service. Read more information on Sweat Equity. • Angel Investors are another option for business funding for seed or early stage startups. Individual angels typically invest anything from $10,000 up to $500,000 in high potential startups in return for equity in the business. Some Angels invest at the concept stage prior to a business being established but the majority invest once the business concept (and the entrepreneur) has been validated to some degree. By validated it might be that the business has received revenue, got a few customers, established partnerships, gained users or some other validation and the Angel Investor can see a clear growth path for the business. Read more information on Angel Investors. • Incubators: An increasing number of startup incubators are

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