Raising Capital For A Young Business : Case Study

Walnut Venture Associates are a group of angel investors. In 1997 the club had around a dozen individual investors, forming an “angel group”. Their primary targets are investments ranging from $250,000 to $1,000,000. This is due to the gap of capital funds initiated by the VC’s from not considering investments bellow $1 million. Also, angel investors can acquire significant equity at low cost, and help the growth of the company with their knowledge and expertise. By selecting only the most exceptional people and ideas, investments in startups can lead to massive returns on relatively small investments. As unexperienced entrepreneurs, they are a key resource to have in order to achieve quick growth, and secure the company’s early stages.

par. 3). Start-up capital plays a vital role in putting up a business. How are the owners will operate the business without the finances? How are they going to pay all the expenses like salaries, taxes and materials they need for the business without the money? There are several ways on how to finance the business. Canada Business Network (n.d.) enumerates these ways like government grants, private sector financing, financing from non-government organization, equity financing and personal assets (par. 1). In Canada, there is a government owned financial institution that supports the finances of small businesses which is called The Business Development Bank of Canada (Williamson, 2008, p. 33). Most small business owners do not realize that there are several pathways to finance their businesses that’s why they end up frustrated and unsuccessful. It would be beneficial for the small business owner to know that there are resources available for

Zacharakis and Meyer’s research (1998) into the investment decision-making processes of VC investors is particularly pertinent to whether VC investments can be systematically improved and whether there are any gaps between understanding of their procedures and what happens in reality. Zacharakis, via studying 53 VCs from the two main start-up hubs in the United States (Silicon Valley and Colorado Front Range), establishes that there is a gap between the factors that affect VCs’ decision-making in reality and the factors that VCs identify as pertinent to their decision-making.

There are several factors that guide the choice among debt financing and equity financing such as potential profitability, financial risk and voting control. Equity financing is a method used to obtain capital in order to finance operations, growth or expansion. Sources of equity financing are extremely important. Major sources of equity financial are Retained Earnings, sale of stock, and funds provided by venture capital firms. Profits that are kept and reinvested are called Retained earnings, which is a very attractive source fund due to the savings it provides to the entity by not paying the interests, dividends or underwriting fees related to issuing securities. This source of financing does not dilute ownership, but it

Private equity investments are primarily made by private equity firms, venture capital firms, or angel investors, each with their own set of goals, preferences and investment strategies.

Angel Investors - The main business angels vary from venture capitalists in their motives and level of involvement. Often angels are more involved in the business, providing ongoing mentorship and advice based on experience in a particular industry. For that reason, matching angels and owners is critical. There are substantial easily locatable networks of angels. Pitching to them is no less demanding than to a venture capitalist as they still review hundreds of proposals and accept only a handful. Often the demands around exit strategies are different for an angel and they are satisfied with a slightly longer term investment (say 5-7 years compared to 3-4 for a venture capitalist).

One of the characteristics of sophisticated investors, which are also their strength, is their insistence on a strategy of exit once they realize their investment is not after all the real deal. Fourthly, sophisticated investors are always keen on how much budding entrepreneurs know about their product/s or service offering. Indeed, it would be catastrophic for any entrepreneur to launch a product or service and then not have enough details about what the product or service offers to the market. For sophisticated investors, knowing how the product or service provides a solution to society is usually more important than having the right product. As such, they are willing to invest in ventures where the owner manifests an excellent command of product/service

Angel investors are another way to start a business, like banks and venture capitalists. It is their job to invest, they just have different evaluations to make an investment worth their attention. Looking at the Angel Capital Group will expose the evaluations they use, and give ideas weather or not an angel investor is right for the business one seeks to have funded (Angel Capital Group, 2015). Understanding their proximity, value, experience and other factors will help define what the angel investor is all about (Bell, 2007). Putting other factual information together along with what the angel is and what they are looking for will give a picture of what the possibilities are for this type of endeavor.

Venture Capital is one of the fastest emerging sources of finance for new entrepreneurs. In spite of its increasing popularity, funding via Venture Capital is faced with a number of difficulties. Thus, it is important to study the various aspects of raising funds through Venture Capital.

Raising Capital it one of the most important thing in any business. It's useless having a great idea and the right connections if you don't have the money to get it going. Without capital, your business can't get off the ground. You need it to buy products or materials, pay wages, have a secure cash flow and generally run your business on a day-to-day basis. The most common types of debt capital are bank loans, personal loans, bonds and credit card debt. When looking to grow, a company can raise funds by applying for a new loan or opening a line of credit. This type of funding is referred to as debt capital as it involves borrowing money under a contracted agreement to repay the funds at a later date. With the possible exception of

Angel investors are those investors that are particularly interested in investing in companies early stage companies. Their investment capital is generally limited and if relevant, it has been advantageous for them to pool their funds as a group to not only participate in larger deals but also to diversify risk. They invest in exchange for ownership equity or convertible debt.

There are two basic ways of financing for a business: Debt financing and equity financing. Debt financing is defined as 'borrowing money that is to be repaid over a period of time, usually with interest" (Financing Basics, 1). The lender does not gain any ownership in the business that is borrowing. Equity financing is described as "an exchange of money for a share of business ownership" (Financing Basics, 1). This form of financing allows the business to obtain funds without having to repay a specific amount of money at any particular time. There are also a few different instruments that could be defined as either debt or equity. One such instrument is stock options that an employee can exercise after so many years with the

First and foremost, we needed our monetary sources mapped out to overcome the financing gap many small firms face. The £10000 of savings of the entrepreneur was taken as the start-up capital to finance

investors exist for larger amounts of capital such as VC funds and banks, entrepreneurial initiatives that require much smaller amounts to start with need to rely on friends and family or own savings. They then also make extensive use of bootstrapping techniques to mitigate their financial constraints, by boosting their short-term profits.

Finding the money to start their small businesses is usually one of the first problems that entrepreneurs face. For most people, this process can be hard and very frustrating. What makes this process frustrating is a combination of wrong expectations and