Accounts & Finance

Alternative Source of Financing

Apart raising money from equity and debt there several other methods to raise money they are described below

Seed Funding: Seed funding is the method of raising money by giving equity to certain stakeholders, seed funding is done at the concept stage, and the process of seed funding is to convert idea into business

Angel Investment

An angel investor is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors invest on-line through equity crowd-funding or organize themselves into angel groups or angel networks to share research and pool their investment capital, as well as to provide advice to their portfolio companies.

Funding

Seed Funding: The term seed suggests that this is a very early investment, meant to support the business until it can generate cash of its own (see cash flow), or until it is ready for further investments. Seed money options include friends and family funding, angel funding, and crowd-funding.

Venture Capital Funding: Venture capital funds are provided to the firm in return of equity at various life stages of a firm, there are three type of venture capital funding

Series A funding: Series A funding is used when the business has shown some effects and business operation is it is used to establish important product base. It provides startup with an opportunity to expand its operations.

Series B Funding: Series B funding is used by the firm for expansion of business, it helps in expanding the market reach. Venture capital looks to quickly increase the size of their pie in series b funding as the firm might have already entered in the growth phase.

Series C funding: Series C funding is used by the firm to increase efficiency and gain a competitive advantage over its competitor, a substantial amount of money of series C funding is invested in R&D so that firm can make some patents they can gain competitive advantage through other methods.