of funding 1: Venture Capitalists.
A venture capitalist is an
investor who gives a small amount of money to small or growing businesses to help
them start-up properly. Venture capitalists are willing to invest in companies
because they can earn a huge return for their investments if these companies
are a success. Venture capitalists
can also experience very major losses when the companies they invest in fail,
but these investors are often so wealthy that they can afford to take the risks
within the funding of young, unproven companies that show that they have a
great idea and a great management team. Venture capitalists mainly look for
strong management teams, a large potential market and a very unique or
demanding product, or service with a strong advantage. They also look for
opportunities in industries that they are familiar with, and they look for the
chance to own a large percentage of the company so that they can influence its
decisions. The venture capitalist usually takes a big share of the company and
also a large share of the company’s profits. But if they fail then they too
also have to pay for the loss as they share part of the business. An example of
a venture capitalist firm is Global Founders Capital (www.globalfounders.vc). They
are global investors that have a track record of building billion dollar
businesses around the globe including platforms like, Facebook, LinkedIn, etc.
they have major offices in Europe, Asia, Latin America and USA.
of funding 2: Bank Loans.
loan is a fixed amount for a fixed date with regular fixed
repayments. The interest on a loan tends to be lower than an overdraft. The interest
rate is usually 2%-5% Apr and the period in which the payment is to be paid is
often 3-10 years. However, a bank loan doesn’t provide more flexibility than a
bank overdraft. The business commits to meeting the bank loan repayments and
interest otherwise the interest would increase the interest amount, you may
have to pay a fee around £30, depending on the amount you loaned, and the
lender can also report you to credit reference agencies for your missed
payments. An example of a loan is: A business borrows £40,000 for 36 months
(3yrs) at an interest rate of 73% APR representative. This means that the total
amount to be repaid is £44,506.80. You would then have to pay £1,236.30 every
of funding 3: Bank Overdrafts.
A loan arrangement in
which a bank extends your credit up to a maximum amount which is called an
overdraft limit. A current account customer can write cheques or make
withdrawals. The most common form of business borrowing, an overdraft is a type
of revolving loan where deposits are available for re-borrowing, and interest
is charged only on your balance goes below zero, this is an overdraft. It is a
demand loan; the loan can be cancelled at any time by the lender at its
discretion, without any warning notice or explanation. If the overdraft is secured
by an asset or property, the lender has the right to access savings accounts or
take you to court in the case that the account holder does not pay. For
example, you might go to a tech shop and want to spend £8,000 on 2 T.Vs, a
sound system, a projector, and a gold plated smartwatch, but you only have
£2,000 in your account, you would be allowed to go a certain amount below zero.
If your balance goes to £-6,000 you
might have to pay the bank back at an interest rate of their choice.