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Source of Funds for Starting a Business

If you are thinking of launching a business Fundraising can be quite difficult. An overview of the different start-up capital will help you determine which funding sources are suitable for starting a business.

1. Own cash (Cash) is an option for entrepreneurs who want to reduce funding. using their own capital in the beginning If there is a positive cash flow A new investment to generate the company’s return on income. It will help to slow down or reduce the acquisition of external investment sources.

– This form of funding is useful for Entrepreneurs who already have a lot of capital Want to own your own business And it reduces the time spent in contacting investors to raise funds. Sometimes there may be an opportunity to lose the work that is thought to be in the proposal stage of the proposal for funding.

2. Borrowing debt to invest (Equity) is another form of financing. Financing is attractive to startup founders. who want to maintain ownership of the company which has to look at debt, which is related to getting a loan that must be paid back with interest during the agreed period. Sometimes, early-stage businesses that don’t have revenues have no cash back in them. Therefore, it is wise to estimate revenue or analyze credit risk appropriately. If the business plan is not good, it can make borrowers difficult to convince credit institutions to lend money.

– This form of fundraising is useful for Entrepreneurs with a small capital want to run a large business. Or they may have capital but don’t want to use their capital to invest in business. or do not want to lose ownership of the business actually choose to borrow money to invest by paying interest on debt Many of which may be used for tax deduction However, there are problems that debt obligations can sometimes be a hassle for businesses.

3. Finding Partners or Shareholders (Debt) Seeking outside funding will help expand the business even more. Most of the funds are raised through financial institutions. The amount or less of the capital depends on The concept of developing a workflow model of the company. and the needs of investors in the market

– This form of fundraising is useful for entrepreneurs with low capital but want to do a large business Don’t want to be a sole business owner There are important resources such as networks and valuable advice from investors. Help reduce the capital that must be lost in their own investments. But there are problems, sometimes there may be a chance to lose ownership of the work.

4. Conversion of capital using promissory notes (Convertible Notes) is the use of money from converting business into short-term debt instruments. Automatically convert to equity In the case that the company wants to provide financing after doing business for a while Now, the business value can be clearly defined. Make investors willing to borrow money to get started. It is expected that the funds given will come back with interest in the form of shares in the company, making it more convenient to raise funds. Beginner investors are familiar with this method and it is popular. Especially due to the fact that there are closing costs associated with paperwork and related legal fees.

5. Grants and Startup Competitions in many countries often have funding sources or funding. To promote and support small businesses or startups Funding in this section is a good channel as most of them are free money. Although there is a problem asking for hard money. There was a messy process.

6. Venture Capital (VC) Fundraising is one of the funding sources specifically for startups, either for corporate groups or venture capital funds. who want to invest their existing funds with startup entrepreneurs with high growth potential This may be in exchange for the proportion of shares and decision-making powers. The investment period is usually 3-5 years, but in order to get money, there must be a sample of the product to see. Or at least have a prototype with a sufficient number of users and a certain level of credibility. There must be a clear business plan where possible. Reasonable use of the capital utilization plan is assessed. Build confidence for investors and attract capital to come in. All big international startup companies have experienced this kind of capital growth, such as Google, Facebook. Many Thai startups have been able to successfully raise funds from VCs. Both domestic and international, such as aCommerce, a comprehensive e-commerce service provider. This funding must have a clear goal in the case of aCommerce is to increase the size of the warehouse. Develop a strong platform And add more than 300 staff members.

7. Mass fundraising (Crowdfunding) is fundraising from individuals or the general public. It has a simpler and shorter process than VC funding or going for a bank loan. But there is a disadvantage that the funds obtained from this method are not much. Most of them use lower capital than VC.

fundraising depends on readiness for business operations Growth phases that require capital expenditure or the need for funds Entrepreneurs should set appropriate capital utilization goals. in each situation Finding the right funding will help. Start a business and run as you want.