Sources of financing for your organization
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
Once you have your accounting system established, you can take your plans for the initial
months and years of operation of your organization, and prepare scenarios of the financial
results of operations for your own peace of mind or as documents to discuss with potential
investors. Keep in mind that potential investors are interested in something they call the "path
to profitability" or P2P. In other words, while they expect that your organization will not be
profitable immediately, they will want some assurance that it will be profitable relatively soon
before they help you get started. While potential investors may like you as an individual, they
want to be sure they will get a return on their investment. The way you do this is to go over
your business plan with them, including the financial analyses that shows them the path to
profitability. They will ask you questions to make sure your assumptions are reasonable, so
make sure you do your "homework" in advance, anticipate their questions, and have good
answers ready for them. The author of Chapter 2 discussed several possible sources you can
explore to obtain the start-up financing you will need:
• savings
• friends and family
• micro-financers
• governmental support
• barter
• bank loans
• networking
• online network
• memberships
Savings: If you have been saving your money and have accumulated enough to provide the
funds you need to finance your start-up, this is the best way for you to go. It can be difficult to
convince third parties that your startup is a good investment, and, in some cases, you may have
to relinquish some degree of ownership (and management control) over your business to an
investor. This can lead to disagreements which, if serious enough, could cause your investor to
demand his or her money returned to them at an inconvenient time.
However, only a small percentage of entrepreneurs are fortunate enough to be able to fund their
start-up costs with personal funds, so most are forced to seeking funding elsewhere. Many
entrepreneurs in the US, for example borrow from their credit cards or take out a higher
mortgage on their homes to avoid having to get funds from others. While this is common, it
can result in personal financial disaster if the start-up fails.
Friends and family: Asking friends and families to invest is another common way that start-
ups are funded. Often the potential entrepreneur is young, energetic, and has a good idea for a
start-up, but does not have much in the way of personal savings. Friends and family may be
older and have some money set aside. While your parents, or other family members should not
risk all of their retirement savings on your start-up, they may be willing to risk a small
percentage of it to help you out. Sometimes friends your own age are willing to work for little
or no wages until your cash flow turns positive. The term "sweat equity" is often used for this
type of contribution as the owner will often reward such loyalty with a small percentage
ownership of the organization in lieu of cash. A variation on this is barter or trade. As mentioned
in Chapter 1, this is a method by which you could provide a needed service such as
consulting/management advice in return for the resources needed for your start up. This needs
to be accounted for in your accounting records also.
Networking, online networks, and memberships all can be ways of meeting managers who have
either successfully launched a star-up or who are in the process of moving their organization
forward on the "path to profitability". Adding to some of the examples given in Chapter 1, you
may wish to consider your local chamber of commerce, a Rotary Club, or a local organization
comprised of entrepreneurs. For example, if your start-up is located in Africa, the Africa
Business Communities portal could be a good source for you to locate networking opportunities
in your community. According to their website:
"The African continent is enjoying a period of unprecedented economic growth. The idea that
business is the key to sustainable development in Africa is gaining ground rapidly worldwide.
"Africa Business Communities is a portal website that brings the visitor into the heart of the
African economy, by granting access to African entrepreneurs. Currently Africa Business
Communities hosts 35 Africa business networks, in the future that will be hundreds".
Bank loans (as stated in Chapter 1) "are not usually available to early-stage entrepreneurs
unless you have a track record of a previous success and/or the assets to put up (as collateral)
such as a home you own in return for securing the bank loan".
Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
They tend to invest in young companies after they have demonstrated that they are clearly on
a path to profitability and they need additional capital to help them grow quickly. Angel
investors, on the other hand, are interested in start-up companies and, unlike venture capitalists
who tend to seek control of the organization, angel investors like to leave management of the
organization to its founder(s). Angel investors are always available to provide advice and
counsel, however. This can be extremely valuable to a young entrepreneur as angel investors
are usually successful entrepreneurs themselves. For example, a recent article in Business Week
magazine describes a USD 300 million angel investment firm co-founded by Marc Andreessen,
of Netscape Communications fame. Named Andreessen Horowitz, the firm's investors (in
addition to Andreessen's business partner Ben Horowitz) include "prominent tech industry
players including Reid Hoffman, founder of the social networking site LinkedIn, and Peter
Thiel, former CEO of the payment service PayPal". The article goes on to say that "Andreessen
Horowitz is expected to concentrate on making investments in technology, with an emphasis
on corporate services and Internet businesses that cater to consumers. Investors who have heard
the firm's pitch say it is adopting a "super angel" strategy in which a modest-size venture firm
invests morsels of money into many startups. "They want to sprinkle as many seeds in the
ground as possible," says one investor who was approached to invest in the firm but declined".
"There's a twist though: While most super angels finance the first round of a startup and work
closely with the company to launch a product, the investor says Andreessen and Horowitz told
him they intend to take a more hands-off approach: They'll invest in 70 or 80 companies with
minimal involvement in most, and then double or triple down on the dozen or so winners that
emerge. The strategy will allow Andreessen to back many more startups than the average
venture firm, but with less control".
Micro-financers If you do the Google search suggested in Chapter 1 you will find a number of
organizations that give small loans to budding entrepreneurs in developing economies. One
such example is Microfinancing Partners in Africa. Here is a quote from their website where
they describe their program:
"Microfinancing Partners in Africa (MPA) develops sustainable businesses and economically
viable communities. We work with community-based organizations to create and support
funding systems that furnish small, collateral-free, low-interest business loans. Grants are given
to organizations that provide business, health and nutrition classes.
"Very often, all that is required are loans as small as $20 to bring a business into full production.
Realistic microfinancing terms, comprehensive training and the development of a community-
based support network result in a high percentage of on-time repayments. This funding system
provides the financial basis for the provision of additional training, loans and business creation.
"Ultimately, these thriving business communities provide the economic foundation for
community development projects, including schools, health centers, power sources, etc.
The one aspect of microfinancers is that their loans are truly "micro". They may be too small
to be helpful in getting your business started. But, you never know. Microfinancing
organizations can be a good place to start, and if your needs exceed their normal limits they
may be able to refer you to other sources of funding. There may be microfinancing resources
available through UN programs, Rotary.org and other sources.
Finally, governmental support is also a possibility. As an example, here is a quote from a
website describing government grants available to start-ups in the US, along with some of the
reasons why the US government is allocating federal funds to private business start-ups:
"Economic development is very important for every country. The economic conditions are
unpredictable and volatile and so every country needs all the help it can get to improve its
overall standing. Businesses are the major contributors to the success of the economy and so
the government is always willing to extend the needed financial aid.
"Some entrepreneurs are hesitant to get assistance from the government. But if you're one of
those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
The government has a huge fund allocation for the grants. If you want to know more about the
government grants, you can simply log on to the internet and search for these entrepreneur
grants.
"Before an entrepreneur decides to put up a business, he conducts a lot of studies to determine
if the business is feasible or not. If he can prove the feasibility of his business proposal, the
government will immediately provide the needed capital assistance through the entrepreneur
grants.
"If the working capital that you've raised from family, relatives, and friends are insufficient, try
to contact the local government and ask for the requirements in order to avail the government
entrepreneur grant. You can either do this online or you can visit the physical office of the local
government of your state or country".
Does your country have a program of assistance for entrepreneurs?
