Entrepreneurship: Financing Decisions for Startups and Instruments for Entrepreneurs

Description

Description: Entrepreneurship and Innovation is important in all areas of business and plays a crucial role in the economy. An understanding of the relationship between entrepreneurship and innovation is essential for identifying new opportunities, allocating resources efficiently and for achieving sustainable competitive advantage. Therefore, it is imperative that decision makers understand the key concepts of entrepreneurship and innovation and be able to apply this knowledge effectively to create solutions to consumer, market, environmental and social problems.

This course features dynamic and engaging video with audio narration, infographics and short quizzes to test your knowledge.

Background: There are many types of financing options and routes available for entrepreneurs to start or grow their business, including personal savings or from family/friends, loans, angel investors, venture capital and loans. The entrepreneurship can use multiple sources to attract funds, but their abilities are the most important determinant to attract investors. The following sections will discuss some of the early-stage funding options.

Angel Investors
Angel investors are the type of investors who uses their money to fund young start-up private businesses run by entrepreneurs who are neither friends nor family. Angel investors might be professionals such as doctors or lawyers, former business associates -- or better yet, seasoned entrepreneurs interested in helping the next generation. They benefit the entrepreneur in many ways, share their knowledge and expertise and are willing to invest hundreds of thousands of dollars in your business in return for a piece of the action.

Many businesses receiving angel investments already have some revenue, but they need some cash to kick the enterprise to the next level. Not only can an angel investor provide this, but he or she might become an important mentor. However, because their money is on the line, they will be highly motivated to see your business succeed. You could be giving away anywhere from 10 to more than 50 per cent of your business. On top of that, there's always the risk that your investors will decide that you are the business' greatest obstacle to success, and you could get fired from the company you created.

Angel investments can be perfect for businesses that are established enough that they are beyond the start-up phase but are still early enough in the game that they need capital to develop a product or fund a marketing strategy.