This final section covers the more difficult sources of finance to obtain starting with Crowdfunding. This source allows for large number of individual investors to invest small amounts towards a business venture. The main advantage of this system is it allows greater accessibility to a wide network of investors going beyond the traditional route of investing. One area that should be of concern with Businesses aiming to launch a project is that if a goal is not reached, any pledges are returned to the investors, and you will leave with no capital raised, therefore, ensuring a realistic target is crucial.
Venture capitalists are organisations who aim to provide capital to companies that possess high growth potential with willingness to bear associated risks. They typically operate in industries with these defined traits such as technology companies. Of course, this comes at a price however, as they are likely to request a large equity stake within your organisation impacting future profits. Venture capitalists aim to exit their investment with the medium term.
This is what set Business angels apart from venture capitalists as Angels tend to invest earlier within a business’s lifespan and oftentimes, are prepared to invest for a much longer period of time. Angels appear not just in the form of organisations, but as wealthy individuals or groups in return for an equity stake.