Capital funding is something that business owners are familiar with. It is the money that equity holders and lenders provide to help grow a business. In the past, people only knew of equity funding as a source of capital for businesses. But as times have changed, new entrepreneurs have more options on how to increase the capital of their company.
Equity funding is a term that refers to any means of financing a business, in which the owner receives money in exchange for issuing the lenders with shares of their stock. Equity funds also include seed financing.
Seed financing is an amount of money a business needs in its early stages to get started. Businesses that seek seed funding are usually still in their conceptualization stage. These companies need small capital to cover their operation expenses until they start earning. Seed money is also a good tool to attract bigger investors. Normally, seed money comes from investors that are personally close to the business owner. They may be from friends, family members, or small angel investors.
Debt is something people borrow that they have to pay back. Whether the company is making a profit or not, they must pay their debts on time to avoid bigger charges.
Bootstrapping is funding a company through the owner’s personal savings. Bootstrapping allows the business owner to work with what they have without outside interference. Owners who choose to bootstrap have more freedom in operating their business than those who rely on others for their funds.