SOURCES OF FUND FOR YOUR BUSINESS AS AN ENTREPRENEUR.pptx

This document discusses various ways through which an aspiring entrepreneur can obtain fund to finance his or her business

1. BUSINESS FUNDING

2. SOURCES OF FUND One of the most important requirements of starting an enterprise is arranging the capital for initial investment. There are many ways to do it depending upon factors like promoter’s capacity, risk appetite, market conditions etc. Some of the prominent ways to arrange funds are described as under:

3. BOOTSTRAPPING Bootstrapping as a source of startup funding is the process of starting and growing a business using the entrepreneur's own capital, without external investments or loans. It involves relying on internal resources and revenue generated by the business to support its growth Entrepreneurs maintain full control over their business decisions and retain all equity, as they are not giving away shares to investors

4. BOOTSTRAPPING The financial risk is borne solely by the entrepreneur, but the potential rewards and sense of accomplishment can be significant if the business succeeds Bootstrapping is a popular choice for entrepreneurs who wish to start small, avoid debt, and maintain full ownership and control of their business. It's a testament to self-sufficiency and financial prudence, but it also comes with the challenge of limited resources and the need for a viable business model that generates cash flow early on.

5. BUSINESS INCUBATORS Business incubators are organizations designed to support the successful development of entrepreneurial companies through an array of business support resources and services. Here's how they can be a source of business funding: Resource Provision: Incubators provide startups with access to essential resources like office space, administrative services, and sometimes even seed funding 5

6. BUSINESS INCUBATORS Networking Opportunities: Startups in incubators can connect with a network of investors, other entrepreneurs, and industry experts Educational Programs: Incubators often host workshops and training sessions that can help entrepreneurs refine their business models and strategies Funding Introductions: They may introduce startups to potential sources of finance, such as angel investors, economic development coalitions, and state governments 6

7. BUSINESS INCUBATORS By joining a business incubator, startups can gain not just funding but also the valuable tools and connections needed to grow and succeed. To learn more about Business incubation programme in Tanzania visit Tanzania Virtual Business Incubator Programme ; The Dar Teknohama Business Incubator (DTBi) ; Tanzania Commission for Science and Technology ; Buni Innovation Hub ( https://bunihub.or.tz/wp/ ) 7

8. ANGEL INVESTORS Angel investors are affluent individuals who provide capital for a business start-up, usually in exchange for convertible debt or ownership equity. They can be a critical source of funding, especially during the early stages of a company's growth. Here are some key points about angel investors as a source of business funding: Initial Seed Money: Angel investors typically provide the initial seed money to get a startup off the ground

9. ANGEL INVESTORS Equity Exchange: In return for their investment, angel investors usually receive ownership equity in the company Professional and Personal Networks: They may come from the entrepreneur's personal network or they can be professional investors looking for new opportunities Risk and Return: Angel investing is risky, but it offers the potential for high returns if the business succeeds

10. ANGEL INVESTORS Involvement: Some angel investors prefer to be involved in the business, offering mentorship and advice, while others may take a more hands-off approach Angel investors are particularly valuable for startups that do not yet have enough of a track record to secure bank loans or attract venture capitalists. They fill the gap between small-scale financing provided by friends and family and larger venture capital investments Learn more by visiting Tanzania Venture Capital Network ; Tanzania Angel investors Network

11. VENTURE CAPITALISTS Venture capitalists (VCs) are investors who provide capital to startups and early-stage companies with high growth potential in exchange for an equity stake. Here's how they serve as a source of business funding: Capital for Growth: VCs invest in businesses that they believe have the potential for significant growth and return on investment

12. VENTURE CAPITALISTS Equity Exchange: In return for their investment, VCs typically receive Expertise and Mentorship: Beyond funding, VCs often provide strategic advice, industry connections, and operational expertise to help the company growh VCs are particularly interested in startups that are too risky for traditional banks and too early for private equity firms. They play a crucial role in the startup ecosystem by providing not just money but also mentorship and access to a broader network

13. CROWDFUNDING Crowdfunding is a method of raising capital for a business venture by soliciting small individual contributions from a large number of people, typically via the internet. Here's how it works as a source of business funding: Wide Reach: Crowdfunding platforms leverage social media and the internet to reach a broad audience of potential contributors Diverse Projects: Entrepreneurs can raise funds for a variety of projects, from creative endeavors to innovative products

14. CROWDFUNDING Small Contributions: Investors can contribute as little as $10, making it accessible for many people to support ventures they believe in Revenue Model: Crowdfunding sites usually generate revenue by taking a percentage of the funds raised Crowdfunding has become an attractive option for startups and small businesses that may struggle to secure traditional funding. It not only provides the necessary capital but also validates the business idea through public interest and support.If you're considering crowdfunding for your business, it's important to understand the different types of crowdfunding available:

15. CROWDFUNDING Donation-Based: Contributors donate money without expecting anything in return Debt-Based: Also known as peer-to-peer lending, where the money must be repaid with interest Rewards-Based: Donors receive rewards based on their contribution level, such as a product or service Equity-Based: Contributors receive shares in the business in exchange for their funding

16. CROWDFUNDING Crowdfunding can be a powerful tool for raising funds, but it requires a compelling pitch, a clear goal, and an effective marketing strategy to attract potential backers Some of the most popular sites include: Kickstarter , Indiegogo , Crowd Supply , Crowdfunder , SeedInvest , Crowdcube , Fundly , GoFundMe , iFundWomen In Tanzania there are Wezeshasasa , Wengi Equity Crowdfunding , etc

17. BANK LOANS A bank loan is a common and traditional source of funding for businesses. It involves borrowing a specific amount of money from a bank, which is then repaid with interest over a predetermined period. Here are some key aspects of using a bank loan for business funding: Interest Rates: Loans can have fixed or variable interest rates, and the rate is often determined by the level of risk associated with the business

18. BANK LOANS Repayment Terms: The repayment schedule can be short-term or long-term, depending on the type of loan and the business's needs Collateral: Some loans require collateral, which can be business assets, personal guarantees, or third-party guarantees Costs: In addition to interest, there may be arrangement fees, insurance costs, covenant compliance costs, and professional advice fees

19. BANK LOANS Application Process: The process for securing a bank loan includes providing a detailed business plan, financial statements, and sometimes a personal guarantee Bank loans are suitable for businesses that need a reliable source of funding and have the ability to meet the repayment terms. However, it's important to carefully consider the costs and ensure that the business can handle the financial commitment before taking out a loan. If you're considering a bank loan for your business, it's advisable to compare different banks and loan products to find the best terms and rates for your situation.

20. GOVERNMENT GRANT Government grants can be an excellent source of funding for businesses, particularly for startups and small enterprises. Here are some key points about government grants: Non-repayable: Unlike loans, grants do not need to be repaid, making them a highly attractive funding option Competitive: Grants can be competitive, with many businesses applying for a limited pool of funds

21. GOVERNMENT GRANT Specific Criteria: They often have specific eligibility criteria, which may include the business sector, size, location, or the purpose of the funding Application Process: Applying for grants can be a detailed and time-consuming process, requiring a thorough business plan and clear objectives

22. GOVERNMENT GRANT Purpose-Driven: Grants are usually awarded for specific purposes, such as research and development, innovation, or expanding into new markets To access government grant funding, businesses can search and filter to find a grant that matches their needs and find out if they are eligible to apply. It's important to note that while grants are a great resource, they should not be the sole funding strategy due to their competitive nature and specific requirements.

23. WINNING CONTEXT Winning contests can be a unique and effective way to secure funding for your business. Here's how participating in contests and awards can benefit your startup: Exposure and Visibility: Winning or even participating in contests can significantly increase your startup's exposure, attracting potential customers, partners, and investors Feedback and Validation: Contests provide an opportunity to receive feedback from peers and industry experts, helping you refine your product or service

24. WINNING CONTEXT Networking Opportunities: They offer a chance to network with other entrepreneurs, mentors, and industry leaders, which can lead to valuable connections Direct Funding: Many contests offer cash prizes, grants, or equity as part of their awards, providing direct financial support to your business Credibility: Winning a prestigious contest can enhance your startup's credibility and reputation, making it easier to attract further investment