Informal Sector - This is mainly though
the social networks one has made through
friends, family, and colleagues at work places or
people in one’s neighbourhood.
Family, Friends and others - Are common
grounds for early-stage source of pre-seed and
seed financing. When businessman seeks capital
from these sources most or all of the investors in
the business have some close personal
connection to the founders for or for worse.
Business Angels - Angel Investor groups are
collective angel networks that share information
about potential investment opportunities for
other angels.
Money Lenders - A person whose business is
lending money to others who pay interest.
Formal Sector - This is the most difficult
of the different sources since it requires a lot of
skill, persistence and a certain level of
accomplishment in society. The formal
institutions will ordinarily give more money to
any start up compared to informal sector and
self-funding.
From Financial Institutions - Is responsible for
the supply of money to the market through the
transfer of funds from investors to the business
in the form of loans, deposits and investments
Overdraft facilities - An overdraft facility is a
credit agreement made with a bank that allows
an account holder to use or withdraw more
money than they have in their account up to the
approved limit.
Leasing - A contract outlining the terms under
which one party agrees to rent property owned
by another
party.
Venture Capitalists- Is a private equity investor
that provides capital to businesses exhibiting
high growth potential in
exchange for an equity stake.
Bank Loans- Small business loans is granted to
entrepreneurs and aspiring entrepreneurs to help
them start or expand business.
Mortgages - Are loans distributed by banks to
allow consumers to buy homes they can’t pay
for upfront.
THE 6 PRINCIPLES OF ACTION
1. Exploit Bootstrapping Possibilities!
2. Raise Funds From The Right Sources.
3. Make Progress While You Wait.
4. Be Sure That The Money Hatches
Money.
5. Pay Yourself A Salary And Use The
Profits For Re-Investment
6. Take Feedback.
Other Conditions That Enhance Finding
Starting Capital
Finding start-up capital is a major challenge to
any entrepreneur. However, some entrepreneurs
stand a bigger chance to find start-up capital
than others.
1. Educational Background
2. Economic Conditions
3. Cultural and Social Norms
4. Novelty Of Idea
Types of Risk
Capital Risk: Losing your invested money.
Inflationary Risk: Investment's rate of return
doesn't keep pace with inflation rate.
Interest Rate Risk: A drop in an investment's
interest rate.
Market Risk: Selling an investment at an
unfavourable price.
Liquidity Risk: Limitations on the availability of
funds for a specific period of time.
Legislative Risk: Changes in tax laws may make
certain investments less advantageous.
Default Risk: The failure of the institution where
an investment is made.