Getting Startup Financing
"No business can survive without access to capital. There are several common types of business financing options available to young companies. "
"Angel investors are an excellent source of early-stage financing. They are often willing to tread where there is too much risk for banks and not enough profit potential for venture capitalists. Angels will invest for a longer time than other investors -- up to three years or more. They may also invest smaller amounts -- $1 million or less. "
"Venture capitalists, by contrast, have stringent investment criteria and generally invest in high-growth technology companies. Because they want a way to cash out in three to five years, many venture capitalists shy away from very new businesses and rarely invest less than $3 million to $5 million at a time. "
"Accepting a venture capital investment also represents the potential loss of independence for owners because venture capitalists often take an active role on the company's board and may push a specific growth agenda. "
"Commercial loans are attractive because they don't require entrepreneurs to turn over equity or company control. But paying off debt can drain a young company with limited cash flow. New companies may not even have access to bank loans if they have no operating history and no collateral to secure the loan. "
"Cash advances from credit cards are an easy and quick way to gain access to cash. But as a long-term financing method, they can be expensive. Credit card interest rates typically run much more than the 1 to 3 percent over prime you would likely pay on a bank loan. "
Read more here.
"Angel investors are an excellent source of early-stage financing. They are often willing to tread where there is too much risk for banks and not enough profit potential for venture capitalists. Angels will invest for a longer time than other investors -- up to three years or more. They may also invest smaller amounts -- $1 million or less. "
"Venture capitalists, by contrast, have stringent investment criteria and generally invest in high-growth technology companies. Because they want a way to cash out in three to five years, many venture capitalists shy away from very new businesses and rarely invest less than $3 million to $5 million at a time. "
"Accepting a venture capital investment also represents the potential loss of independence for owners because venture capitalists often take an active role on the company's board and may push a specific growth agenda. "
"Commercial loans are attractive because they don't require entrepreneurs to turn over equity or company control. But paying off debt can drain a young company with limited cash flow. New companies may not even have access to bank loans if they have no operating history and no collateral to secure the loan. "
"Cash advances from credit cards are an easy and quick way to gain access to cash. But as a long-term financing method, they can be expensive. Credit card interest rates typically run much more than the 1 to 3 percent over prime you would likely pay on a bank loan. "
Read more here.
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For more information, visit www.EvanCarmichael.com. |
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