When a company initiate its business then it requires funds to be raised from different sources. The different methods of raising funds are through personal capital, taking loans form friends or relatives, loan from financial institutions, crowdfunding and from investment funding, venture capital and angel investors.
By funding a company through the funds of the entrepreneurs of the company is the best method because there is no burden of loan on the entrepreneur of the company. Raising funds from taking loans from friends and relatives that helps the entrepreneur an easy loan advancement. It is an informal way of raising funds so entrepreneur must ensure to make a legal contract. It is best to make a transparent type of business by telling the different ways of earning profit and ensuring a professional way of agreement.
There are different companies that raises capital from the public of different countries like real estate crowdfunding Canada, production crowdfunding Australia, Advertising USA etc.
Taking loan from financial institution involves many paperwork and formalities to be completed. The entrepreneur of the company also have to keep something as a mortgage in order to take loan from banks or other financial institutions. Interest is paid in return to the banks.
Venture capital means when some investors provide capital to start-up firms and small businesses that perceives high level growth. It is a very important source of raising funds who do not have an easy access to capital markets. It is mostly done by those investors who are able to take entail high risk.
Crowd funding is a method used by the entrepreneurs to raise funds from the public by issuing of shares to the public. A relatively small amount of money is contributed by the shareholders in order to finance a new venture or a project. Real estate crowdfunding is the best method to raise capital from the public. There is a high risk but a large amount of capital can be raised in a very short notice. In return dividend has to be paid to the investors.
Angel investors means when an investor takes an initiative to provide loan to the small businesses or start up. Angel investors are mostly found among the friends and relatives of an entrepreneur. The capital provided by the angel investors proves to be a great boon for the start up in order to carry on the company in difficult times.