Seed capital funding

1) Start up loan
2) Family members generosity
3) Crowd funding for raising capital
4) Angel investors ( business leaders with money to invest in, easy access to million dollar)
( Highest risk with highest return)
5) Government charities

Secured lending by banks : even if the company fails , the bank would able to recover some of the
loan.

Venture capital: their role is to provide promising stsrtups with the capital in the hope that the
business will grow rapidly and the value of their share wil increase .High risk, high return

Order of risk ( In terms of investors)

1) Bank – low risk

2) Venture capital – Relatively riskier

3) Angel investor- Highest risk

An IPO is when a successful, privately owned company starts selling shares in its business to the
public through the stock market.

Corporate treasurer- a person who ensures a companies financial success by managing its money
and financial risks.

Prospectus- a marketing brochure that describes an investment opportunity in detail and Is designed
to attract potential investors.

Types of investments
1) Hedge Funds - Serving households by investing their money in high risk assets

2)Mutual fund - Serving household by offering a professionally managed way of investing, based on
pooling money from multiple investors.

3) Credit rating agency – Instituition which provides independent assessment of the financial
strength of companies and governments.

4) Investment Banks- Sell side institutions which helps raise money by issuing stocks or bonds .
They at as a matchmaker, linking companies who need investments with buyside investors.

Bonds- Interest paying IOUs between a company, bank and or government that wants to raise
money. They are a voucher given to the lender, promising the borrower will payback the principal
sum on a certain date and they will only pay interest till then.
Financial risks

company loosing money ona business or investment decision

Types of financial risk

1) Operational risk - loss due to inadequate or failed internal processes , people oy system or
harmful external events as well.
2) Reputational risk – damage of companys public image , leading to loss of customers and
profits.
3) Liquidity risk – loss due to company not able to meet its obligations.
4) Credit risk- The chance that the money a company has bprrowed wont be repaid.

Retail Investors- Household who invest in public company.

Buyside Institutions – Retail banks, mutual b\funds, pension funds, Insurance companies

Sell side industries – commercial banks, investment banks, credit rationing agencies, brokers