Question

Consider this scenario. You have a feasible business idea and the business estimated start-up cost is USD 65,000.00. You have a savings but it is not enough to cover the full expenses to launch your business. Discuss what other sources of finance that are available in your country that you believe you can access. Also, tell us why you have chosen those sources

Answer 1

Available sources of finance:

1. Family and friends: They can lend you or even invest in your business for equity. This source is one of the cheapest and easily available.

2. Angel Investors: Generally they are retired company executives or wealthy individuals who make direct investments in startups and small companies. They can contribute by means of their network of contacts, knowledge and experience.

3. Venture Capital: This source basically invests in your startup in exchange for equity (ownership will be shared). They expect a high return on investment once the business is established.

4. Business Loans: You can approach banks for business loans. If the proposal is good, you can get access to the funds and you can retain the full ownership.

5. CrowdFunding: As the name indicates, crowdfunding refers to getting funds from the public. Entrepreneurs typically use this source when they are developing a product that’s essential to people. There are platforms which help in this funding.