Risk, reward and the motives for raising and investing money.
- Financiers link folks who need cash now (but do not have it) with folks who have cash now (that they are not using).
- The secret to a good deal is understanding what each side is really looking for.
- Any early-stage business seeking finance should ask: why am I looking for money and not generating it myself?
- Good reasons that ideas businesses might seek finance include :
- Buying equipment needed for the business to operate.
- Putting down a deposit on working space.
- Working capital — cash to pay staff salaries and other expenses now, when a customer who is paying for the fruits of their labour might take a few months to deliver payment.
- Expansion capital – cash to pay for the people and cost of things required to develop a new product, service or a new market.
- Acquisition funding – cash to buy another business.