Question

Suppose you need $1 million dollars to start your dream business. Describe two ways you would generate the funds needed to start such a business. Next, discuss any risks or benefits you should be aware of when gathering these funds. Provide examples to support your response.

Answer 1

Answer:

Following are the two ways to generate the fund and start a new business:

Explanation:

• Venture capitalist- It would be a type of equity finance in which venture capitalists will in particular aim for just a considerable amount of interest throughout the new startup. It enables you to get control of the mangers and try to get the funds from it by providing venture capital, that is diluting the interest in exchange for the funds necessary to begin the company.  It will also add the knowledge on different issues, which is associated with this form of financing. It also ventures capitalists tend to intervene with leadership and try to control their company to harm the developer.
• It may also aim to manage the capital via a bank loan, in which it seeking to arrange funds by the use of cash, and these credits will have set loan repayment responsibilities even if it gains no profit, it is extremely risky and also has lower costs, because interest costs are mostly taxable income in design. This problem with both the taking of loans is because it has a fixed obligation and also poses a business liquidity position.