CHAPTER 7 FINANCING THE NEW VENTURE

CHAPTER 7 FINANCING THE NEW VENTURE

1. SOURCES OF FINANCE

   • Personal funds(entrepreneurs own contribution in cash or assets ; equity internal financing)
   • Family & friends ( based on relationship with entrepreneur ; internal equity financing)
   • Venture Capital( capital investment made by professional fund managers ; external debt with equity)
   • Bank Loans ( time-based borrowings involves having collateral or sureties ; external debt)
   • Government Financing Schemes ( Loans and grants ; external debt/ outright payout)
   • Bootstrap Financing ( in the form of internal savings and conserving cash through supplier discounts and deals ; internal financing in the form of savings & cash conservation)

2. BUSINESS DEVELOPMENT PHASES

   • Start-up Phases Fianncing
   • Early Growth Financing
   • Full Growth & Expansion Financing

3. EQUITY FINANCING

   • Involves funds (cash or asset) from parties who expect to take some form of ownership stake in the new venture to represent the extend of their contribution.

4. DEBT FINANCING

   • Involves the business owners taking on borrowings that have to be paid back over a period of time with additional charges ( interest or administrative fee)