At times, those looking to start a business often run into a cash crunch, but according to financial expert, Brian Bonar, that doesn’t mean you must put your entrepreneural dreams on the back burner. For those looking to launch a business, there are other places to find funding.
Good old bank loans have become scarce. It’s even been difficult for credit unions to fill the gap, but confidence still prevails. “Many investors are seeking businesses to invest in,” says Bonar. “You simply need to know where to look.”
Venture Capital Funding
Also known as venture capital financing, is a method of investing in a new business or in a new project that is about to be launched by an existing company. In many cases, the investors seeking financing ventures like this do so because it offers a significant return on their investment, especially if the project is considered somewhat risky. Investors who are involved in a venture capital strategy are often called angel investors whom enjoy the challenge of being involved with a company that carries a higher risk.
According to Bloomberg, Brian Bonar points out, “there are a number of ways to approach risk capital financing.” One method used is to get the financing from one investor. With this arrangement, the investor may undertake raising the necessary funds to keep the business in full operation for an agreed period. The expectation is that at the end of this cycle, the business will have begun to build a customer base, and is able to generate enough revenue to cover their overhead, including the issuance of repayments to investors.
In many cases, entrepreneurs prefer to advertise their need for venture financing to several business angels. This is one reason some investors have chosen to form venture capital groups, also known as risk capital groups. The members of such groups commit to an amount of money in exchange for a share of the profits that will be generated by the company. This approach typically offers investors, that are not able to invest into the whole project, to invest a nominal amount and over time, still get a return on their investment.
Bonar says, entrepreneurs often think their opportunities for funding are limited, however more than a quarter of startups rely on venture capitalists arrangements. The financial expert and CEO has founded several businesses including Trucept, Dalrada Financial Corporation, and Bellamy’s Grand Bistro in San Diego, California. Bonar reminds newcomers to pay particular attention to any agreements.
Advantageous company funding agreements are always clear and coherent and point out the rights and obligations of all parties. While some venture financing arrangements are very simple, others can be very complicated. Bonar says, for this reason, all parties should legalize the arrangement by a lawyer to articulate the terms in a language that both investors and owners can understand.
To learn more about Brian Bonar and his business tips, visit his LinkedIn profile.