The number of people in the finance industry has been on the rise over the last decade or so, which has seen Funding & Investors in particular undergo a significant change in their offerings. It is generally accepted that the two sectors have many common characteristics, with Funding & Investors acting as the middlemen between entrepreneurs and start-ups in looking for funding sources and entrepreneurs in looking for suitable business opportunities for investment. There are many factors that make Funding & Investors an attractive option for businesses in the early stages of development. As they act as a bridge between funders and entrepreneurs/investors, they often have more experience and contacts in the field than start-ups and can thus provide more relevant advice to businesses and they do not need to rely as much on the personal selling abilities of the Entrepreneur / Business Owner.
One of the key factors that makes Investors attractive to potential investors is their obvious reliance on the market. They rely on the ability of the market to continue to be profitable, and rarely (if ever) for the business to break even, although they are not ruled out of the possibility of such a situation. As a result, they have a vested interest in keeping a healthy market share, so as not to lose all of their profits. They also have a great deal of knowledge in the workings of the financial markets and are often able to provide start-up money to relatively new ventures since they usually have an extensive range of contacts from previous clients and projects.
Another factor that makes Investing attractive to new businesses is that there is less pressure to find a partner from a known source, as this often precludes the need for an initial investment from an entrepreneur. This lack of pressure often results in a better result when sourcing investors, as there is less pressure to settle for less than optimum, and as a result, more companies tend to approach Investing than traditional business funding sources. Funding & Investors often provide seed money to aspiring businesses that meet a specified set of criteria, and it may be that investors are reluctant to invest in high risk, high value start-ups. They are also more likely to take a long term view of the companies they are funding, which again may be preferable to those who may only see short term returns. Some investors will provide seed money only to those with an excellent product, and there are some who will only invest in certain types of businesses.
The biggest differences between small business loans and Investing for growth are the terms and conditions. Small business loans typically do not have repayment terms, since they are usually given on a one-to-one basis with the lender. This facilitates flexibility and affordability, and is not restricted to just entrepreneurs starting out. There are even some funding sources that allow the borrower to repay the loan early by opting out, so there are fewer reasons for an entrepreneur to choose a bad credit business loan. Investors, by contrast, generally expect a full repayment of the capital. One major difference between the two is that investors have more control over a company, since they are more involved in day-to-day operations and can often influence growth or management decisions to make a profitable business.
In addition, it should be noted that small business investors do not have to be limited to traditional investors. Capital from friends and family accounts, personal savings, and even a few lines of credit are other options for raising funds. With so many resources available to entrepreneurial startups, it is likely that there are many individuals with investment experience who would be willing to invest money in a startup. Those in financial services, law, and marketing are also typically able to provide seed money as well as offer other forms of investment.
As stated above, funding for a business will differ depending upon the intent of the entrepreneur. Some are looking for a significant influx of cash to grow their company quickly, while others are seeking funding for expansion or research and development. Investors in the growing technology field typically seek funding in the form of start up loans, private equity, and venture capital. Venture capital is raised for a high risk, short term investment. Many investors seek a combination of start up funds and growth capital for both new and existing companies.