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Alternative Financing Options for Startups

The document analyzes several options for alternative financing to start a business. The author explains that he would choose a participatory loan because it allows for tax deductions, flexibility linked to the company's results, and maintaining shareholder control. He then analyzes each alternative presented in the article, including self-financing, private financing, private investors, bank financing, public financing, and collective platforms. He concludes that each option has its advantages and disadvantages.

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25 views2 pages

Alternative Financing Options for Startups

The document analyzes several options for alternative financing to start a business. The author explains that he would choose a participatory loan because it allows for tax deductions, flexibility linked to the company's results, and maintaining shareholder control. He then analyzes each alternative presented in the article, including self-financing, private financing, private investors, bank financing, public financing, and collective platforms. He concludes that each option has its advantages and disadvantages.

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Student: Laurentino Jesús NSUE MANGUE

MODULE II: ALTERNATIVE FINANCING


REFLECTION ACTIVITY

1. In case you need to use financing to be able to start a business, what


which financing option would you use? (The alternative you describe does not
it has to be the ones mentioned in the article)
To embark on a venture with the support of alternative financing, I would choose the modality of
Participative loan. Mainly due to the fact that it allows deductions
fiscal policies involve flexibility linked to the company's results, not
requires guarantees or endorsements, its degree of enforceability is subordinated to others
credits and, in addition, it would allow me to maintain control of the company's shares.
2. Analyze each alternative presented in the article and give your opinion on it.
they
Self-financing
The contribution of own capital is essential for other investors to understand
the level of confidence that one has in their project. In addition, it produces
an effect of greater commitment to the success of the company by putting at risk the
own heritage.
Private financing: Family, friends and fools
The main disadvantage of this source of funding is that it limits the volume of
the resources that can be made available. In this sense, it is possible that the need
funding to start or invest in a new project is not covered and is
it has to be complemented with another source.

Private investors: business angels


As a direct investment, its main characteristic is that it largely depends on
from the perception of investors. In this sense, there is a risk of underestimating
the potential of the company or that the new partners reorient the project in a
totally different idea from the original that ended up causing the exclusion of the
entrepreneurs.
Bank financing
This financing is traditional, characterized by being stable and proportional.
but, at the same time, costly and inflexible regarding the situation of the company.

Public funding: grants and bonuses


It is preferable to turn to these alternatives during the growth stages of the company and
complementarily, mainly to offset the cost of
financing of the other alternatives.
Collective platforms: crowdfunding and crowdlending
Crowdfunding is very valid in the project stages of the company, that is,
as seed capital, for projects aligned with a specific social group or that
they aim to meet the demand of a specific group.
Crowdlending is more akin to participatory lending, but it does not entail
tax deductions.

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