Financing is essential to starting a business and helping it thrive.
There are a number of sources to choose from when looking for start-up financing. In fact, financing entrepreneurial ventures has become an increasingly important driver in the international investment industry, as well in fueling innovation and growing world economies.
While a growing number of newly founded companies are engaged in technology, there are as many start-up ventures that can be found in traditional forms of businesses with equally remarkable potentials for growth.
How much capital infusion a start-up needs depends on the type and size of the business, and the industry where it is engaged. For instance, manufacturing companies that require heavy equipment are more capital-intensive than say, digital-based based retail services that rely mainly on e-commerce.
If the start-up founders are incapable of raising initial capital from their own pockets, they normally look into traditional sources for financing. These include bank loans, seed investments, business angels, venture capitalists, family offices, or even loans from friends and relatives.
But just as there are sweeping changes across the global economic landscape, investment sources for emerging companies are also changing and evolving. With the emergent dominance of digital technology comes new sources of financing that use online platforms or come in the form of digital assets.
There is also the increasing popularity of seed accelerators, who not only offer financial support to star-ups, but also education and mentorship for a fixed period of time. This is aimed at accelerating the growth of exceptional new ventures and eventually forming a successful pioneering company.
Veritas Global is proud of its impressive track record in serving as outsourced general counsel to emerging companies seeking more avenues for growth, as well as to private investment firms looking for fresh business opportunities.
With our thorough understanding of the needs and expectations of active players from both sides of the investment spectrum, we can skillfully guide you through the minutest details of financing your business effectively.
Sources of financing
The two major sources of financing for emerging companies are equity and debt. In some cases, governments also provides grants and incentives on a local or national level, in order to stimulate gainful activity and innovation in particular industries.
Debt financing or taking out loans from creditors is probably one of the oldest forms of business financing, and is usually carried out by banks and similar financial institutions. Entering this type of agreement stipulates that the borrowed funds will be repaid with interest over a specific period of time, which can be either short- or long-term. Sometimes, the creditor would also secure a collateral whose value can satisfy the loan should the borrower be unable to repay his debt.
However, new ventures with no proven track record or collateral to offer would find it difficult to arrange a business loan. This is why most start-ups turn to other available options, such as equity financing.
In equity financing, the owner procures financial investment in exchange for a portion of ownership (or shares) in the business, which in turn allows the investor to partake of future gains.
Technically, equity financing is not a loan because it involves a permanent capital infusion into the company with no expectations of recompense. The investor makes a calculated risk in providing financial support to the startup and hopes for favorable returns upon exit should the venture continue to prosper.
Some of the more familiar sources of equity financing are venture capitalists, angel investors, family offices, initial public offerings, and more recently, crowdfunding.
Grow with confidence
Veritas Global offers strategic, sensible, and business-oriented advice to emerging companies from entity formation to raising capital, regulatory compliance, intellectual property issues, and all other undertakings that entail legal representation during their early growth stages.
Moreover, we are committed to assist you through every stage of your business life cycle.
Drawing on our unique capabilities and productive years of real world experiences in working with companies in all stages of growth, as well as with leading private investment funds, corporations, and financial institutions all over the world, you can be assured of personalized service and exceptional support that is comprehensive, up-to-date, and commercially viable.