Sources of Funds IP

Running head : Sources of funds IP

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When one has an idea of starting up a business , there are many requirements that are required so as to make it possible , these requirements are such as location of the business , influstructure , legal requirements , and capital . The main requirement however is the source of initial capital required to set up the business . There are various sources of funds to that a person can adopt to start a business . These include funds obtained through banks or lending institutions also

br referred to as debt or debentures , there is venture capital or private also known as angel and funds that come from investors commonly known as equity capital . Equity funds has numerous carefully selected stocks which achieve a fund 's stated objectives like long-term growth of a business , three , Schilit (1990

Equity capital of an intellectual property can be obtained from sources such as personal funds . Personal funds are such as own savings inheritance from a person or personal borrowings from financial institutions , help by friends , relatives and funds from business associates . They can also be obtained from potential employees by offering them to become investors in your business . Funds received from employees have an advantage in those employees who have contributed business capital tend to be more committed to work and they are usually willing to receive low wages and salaries . The owner therefore should also give him /herself a low salary so as to be on the same line

Another good source of capital for a business can be derived from business partners especially those who have the money and business knowledge . Owners should find partners who are expertise in the business line which he /she is not good at so as to improve the business at all levels

Investors are the fourth source of funds where a business owner should first look within the industry to get active investors since an investor will prefer to invest in a business which he /she understands and he therefore will have far less explaining or selling of the concept to do as the investor will have the knowledge of the business industry . Having investors in the business is also advantageous because their influence in the industry may provide access to additional contract opportunities for owners in the industry . If a business man alternatively seeks passive investors who have little or no involvement in the business he /she should find professionals who have a steady income and a primary responsibility which does not allow them to interfere in your time Doctors or a group of medical practitioners , a lawyer or professional financiers are a good example of such investors

The fifth source of equity funds is by taking a business public where the public is allowed to have a share in the business . This however is probably the most risky choice and is usually not a recommended option for very new or very small businesses due to the number of legal issues and...