Скачать или смотреть raising capital and funding options Module 2 Traditional Funding Sources – Banks, Venture Capital

Module 2 delves into traditional funding sources, providing a comprehensive understanding of how businesses raise capital from established financial institutions and professional investors. Unlike modern or alternative financing methods, traditional sources often come with well-structured processes, regulatory oversight, and formal investment criteria. This module emphasizes not only the mechanics of accessing funds but also the strategic, financial, and relational dimensions of securing capital from these sources.
Understanding traditional funding is critical because, for most startups and growing enterprises, these sources remain the primary avenues to secure large-scale and strategic funding, enabling operational expansion, market penetration, and technological investment.
1. Bank Financing
Bank loans are the most conventional form of debt capital, widely used by businesses of all sizes. This section examines:
Types of Bank Financing: Term loans, overdrafts, revolving credit lines, and project-specific loans.


Evaluation Criteria: Banks assess creditworthiness, collateral, cash flow projections, and business viability before lending.


Interest and Repayment: Loans typically carry fixed or floating interest rates and require repayment in installments over an agreed term.


Advantages: Predictable cash flow management, no dilution of ownership, established legal framework.


Challenges: Strict documentation requirements, collateral demands, risk of over-leverage, and potential covenant restrictions.


The module emphasizes preparing bank-ready financial statements, cash flow projections, and business plans to improve loan approval chances.
2. Angel Investors
Angel investors are high-net-worth individuals who provide early-stage funding in exchange for equity or convertible instruments. Key aspects include:
Role: Angels often invest at the conceptual or seed stage, providing both capital and mentorship.


Motivations: Profit potential, involvement in innovative ventures, and personal interest in the business sector.


Investment Size: Typically smaller than venture capital rounds, ranging from tens of thousands to a few hundred thousand dollars.


Advantages: Early-stage support, flexible terms, advisory guidance, and industry connections.


Challenges: Equity dilution, potential influence on strategic decisions, and informal investment processes requiring careful legal agreements.


The module highlights strategies for identifying, pitching, and negotiating with angel investors, emphasizing relationship-building and credibility.
3. Venture Capital (VC)
Venture capital provides professional funding for high-growth startups with scalable business models. This section covers:
Fund Structure: Venture capital firms pool resources from institutional investors and high-net-worth individuals.


Stages of Investment: Seed, Series A, Series B, and later rounds. Each stage corresponds to a business lifecycle, growth potential, and risk profile.


Evaluation Criteria: Market potential, revenue projections, scalability, competitive advantage, team capability, and exit strategy.


Advantages: Large capital infusion, strategic guidance, operational support, and access to networks.