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  • Different Types of Financing for the Company

    There are alternatives for entrepreneurs who need financing but have been given the noble by the bank and the venture capital companies. Here, we list some strategies!

    For new entrepreneurs and companies, alternative sources of financing can be effective solutions. Alternative sources of financing can be particularly useful during phases of company development that are strongly associated with growth. Frequently these new financing strategies are based on digital solutions, the possibilities of which are constantly evolving, but that also includes more conventional financing answers offered by business angels and venture capitalists of various kinds. Various forms of advance financing, factoring, and leasing are also significant sources of financing and have a lot to get from new digital solutions.

    Crowdfunding

    Crowdfunding means that someone is turning to a large number of investors, often to the general public, to raise money for a specific project or purpose in a context of a limited period of time. Sometimes, it can be called grassroots financing, people financing, or mass financing.

    Usually, a large number of people with small sums contribute to these projects, although there are cases where individuals contribute with considerably little financing. For such purposes, the meeting between the fundraiser and the investors usually takes place via social media and special internet platforms.

    The attention of media to the crowdfunding can be more important than the funding itself. But using crowdfunding can also be far more time-consuming than many people imagined. Extensive work and efforts are required, among other things. To fine-tune the business model, develop a powerful presentation material, and keep in touch with those who will invest in the project.

    P2P, Peer-to-peer

    P2P is often based on decentralized interactions between individuals and groups. It is thus a process where individuals gather to fund each other. Common examples are corporate or ethnic groups that support similar branches. Often, successful entrepreneurs are willing to fund similar new ideas. The method is also used in computers and networks (peer-to-peer file sharing), as well as in currency trading (virtual currencies).

    Microloans

    There are companies and non-profit organizations that offer small loans, up to a few hundred thousand or less, to promote entrepreneurship and support people who would normally not fulfill the bank financing requirements.

    Business Angels

    Business angels can easily be described as private individuals with their own experience of starting and running a business and who have the time, commitment, and capital to invest in promising business ideas. You, as an entrepreneur, can access the capital, skills, and useful contacts via the business angel. Often, investment is made in start-up and growing companies in fast-developing industries. The investment can consist of money, but also time and a great commitment.

    At the same time, the business angel wants a good return on their investment and is therefore prepared to contribute to the company's development through their own work. Engagement from one or more business angels can be quite valuable at the beginning of a company's development.