Question

After graduating, you have decided to become an entrepreneúr. You have an exciting idea for a new technology businessand an entire business plan for it but what you lack is sufficient funding. Discuss three (3) financing options availabie to rake adequate capital to bring your idea to existence:

Answer 1

An entrepreneur has several options to finance a new technology business: using personal savings and credit, obtaining investments from angel investors, or seeking funds from venture capital firms. Each option comes with its own set of risks and implications for business ownership and control.

Step-by-step explanation:

Financing Options for Entrepreneurs

After creating a business plan for a new technology business, an entrepreneur has multiple financing options to raise the necessary capital. Here are three:

1. Personal Savings and Credit: The entrepreneur can use personal funds and credit cards to invest in the business. This is often the most accessible source of funding, although it can be risky to the individual's finances.
2. Angel Investors: An entrepreneur can seek investment from angel investors, who are individuals with the financial means to provide capital in exchange for equity in the company. Angel investors typically invest in early-stage companies and can offer valuable experience and networks along with financial support.
3. Venture Capital Firms: For businesses with high growth potential, venture capital firms offer significant investment in return for equity. These firms generally come in after angel investors and may provide more substantial sums to scale the business rapidly.

When an entrepreneur utilizes these options, they must also consider how to manage and repay these investments, as well as how it affects ownership and control of the business.