Financing a Business

The process of choosing the right kind of financing is rather confusing especially to a start-up. With the dimensions in question in this case, I would suggest having an angel investor. An angel investor is a person who can invest in a new business through provision of capital for start-up or expansion. Such individuals do not like traditional investments and will often look for higher rates of return. In this model of financing, you will have to part with part of your company in form of equity. An angel investor is interested in equity financing. This model is appropriate since the business cannot secure traditional financing such as loans as it is not established and does not have any collateral that can match its needs.  The angel investor can be either one of the people in his family. 

It would be advisable if you choose an angel investor with some business acumen. This will further help in the decision making process as well as advising on what is most appropriate in the process. The angel investor, will most likely be interested in helping the business make major decisions but will not be interested in day-to-day running of the business. This model of financing is a cheaper and less strenuous form of financing as it does not require monthly payments in terms of capital and interest. The investor will only be interested in part of the profits as agreed during the start of the relationship. Besides the interested family members, other sources of angel investors include friends, wealthy individuals, groups of angel investors, and crowd funding. Before starting the process, it is important to have the parties agree on important issues such profit sharing operations.

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