Entrepreneurs are always in the need and on the lookout for capital and several available resources to get funds for their business operation and success. Modern funding methods, principle, innovations, and technology has helped several entrepreneurs, startups or established, to access funds easily to keep their business running and the shutters open.
Thanks to the initiation of the digital revolution in the late 1950s, it ushered in a new age of modern technology that changed the concept of business in all forms and types. The world saw a plethora of opportunities brought in and this newly found marvel, therefore, initiated the process of developing and exploiting new technology in order to provide more assistance and gain more power across various sectors, service, industrial or otherwise.
Power of technology
Various business owners also witnessed the extent and power of technology and they saw the potential growth and possibilities in it that will help their business in many different ways. It proved pretty soon that using technological for their business purpose provided with an added advantage over their competitive players in the market.
- It soon became the primary reason and effective tool for businesses of all types to reach the pinnacle for success irrespective of their shapes and sizes.
- Thereafter, advancement in technology proved to be the one most significant factor for success as well as the expansion of several business ventures.
- Now a day, you will see that several business owners have become successful by using and exploring new and innovative technology. They dedicated these to further their growth and get all their business needs fulfilled including their need for funds.
After conducting thorough market research many entrepreneurs have been successfully able to pinpoint the current trends of business, the market, and consumer behavior. All these features helped them to develop a business platform and strategy that will be beneficial for both the businesses as well as the consumers.
Business development is a daunting task
It is not an easy task to build a business from scratch. It is daunting, tiresome and needs a lot of calculations, predictions and strategic planning. It also involves several different risks and comes with a minimum guarantee of success.
According to research, about 25% startups fail in their first year of the business itself due to various factors such as lack of experience, improper accounting skills, faulty business, and financial management but the most significant reason seems to be the lack of funds.
The fund is essential to ensure a great start and to further ideas. It will help a business to explore newer and better avenues for their growth which is why startups often require initial funding to kick-start their business till the time it is able to start generating revenues on its own.
Easy access to funds
There are lots of investors out there who are in the lookout for dynamic entrepreneurs and prospective ventures to invest in but they, however, invest only in the cream of the crop. This means a majority of the startups are left high and dry. They look for alternative sources such as banks and other institutions such as the US to need their financial needs.
Technology has helped them to get easy access to funds without even having to meet the lender face to face or even having to undergo a grilling and grueling telephonic interview. Such easy access to funds has enabled them to grow and expand their business goals.
Due to a large number of tech startups coming into existence, the investors and other partnership firms find it difficult to handle and deal with so much funding just as they find it difficult to handle their business. This has resulted in the other forms of funding coming into existence to provide monetary assistance required by the fledgling business ventures.
Entrepreneurs now can get funding for their startups through different sources such as:
- Angel investors that consist of wealthy and prominent people
- Crowdfunding that involves a large audience in a specific platform on the internet ready to provide financial assistance
- Traditional banks and other financial institution
- Venture capitalist as well.
Entrepreneurs can also reach out to a wider audience and market with the help of the World Wide Web. They can now look at a wide array of policies across different lending markets that are all designed specifically for different types of people needing financial assistance.
There are also different grants and tax breaks that help the entrepreneurs to make capital more easily attainable.
Debt and equity
With all these benefits available the entrepreneurs, however, turn to two specific forms of private external financing in most of the cases namely, debt and equity.
- Debt dominates the choices when it comes to typical firms in debt the banks dominate amongst all different forms of debt. Banks ideally happens to be the primary source of capital and funds for new businesses eclipsing all other available sources of funding for the new entrepreneurs. Studies show that around 40%of the initial startup capital for new businesses originates from banks and small banks, in particular, excel in this matter as they specialize and rely on soft information that substitutes for the more traditional processes of risk.
- Equity, on the other hand, is much rarer but it is more impactful. The most significant sources for equity financing are angel investors and venture capitalists. Though they have a very undersized presence and finance less than 3 and 1%respectively, entrepreneurs value then as they can provide a lot of assistance through their networks, expertise, and guidance. Entrepreneurs when venture-backed can have an increased probability of an Initial Public Offering and also have a greater rate of post-IPO survival.
Apart from these, the entrepreneurs use different other non-traditional channels to raise business capital such as accelerators, government grants and prizes, federal entrepreneurial finance, and policy to create better opportunities for their business. There are also several state and local grants and policies that are specifically designed to help the budding entrepreneurs to start, run, survive and succeed in their business.