How to obtain financing sources for my business?
Another important factor is the size of the company and the stage in which it is, since the type of financing that can be obtained depends on these two variables, since, if it is a company in the idea phase or in a very early, they can resort to the famous FFF money (Friends, Family and Fools). It is an informal financing option, which most of the time does not require contracts and guarantees and is made up solely of the trust of the investor towards the entrepreneur and can be through a loan or capital.
Types of funding sources
Seed capital
This type of capital is also known as "Smart money" since these investors not only provide liquidity, they also support with rabbits, advice, mentoring, etc. to boost the growth of the company that is still in very early stages.
venture capital
Also known as venture capital, they are funds that invest larger amounts in startups in the growth phase, who’s potential and risk are high. It is important to have very defined and attractive projects, to attract the attention of these funds.
crowdfunding
If technology has brought us anything through various channels, it is financial inclusion. Crowdfunding are platforms in which you can publish your company or project, allowing natural and legal persons to invest in them either through debt, capital or even through donations.
private equity
Private equity funds are ideal for companies in more advanced stages and with more aggressive growth plans that need a strong influx of resources to expand and finish consolidating. The objective of these funds is to grow the company and, if possible, accompany it until it goes public.
debt funds
They can be a great alternative to Equity and bank debt as flexibility is a key differentiator. Despite having higher rates than banks, they are usually good options for companies that have already exhausted their bank credit lines or are not looking to give up company participation in exchange for capital. These funds offer from the well-known senior debt to Mezzanine debt, where the latter has become famous for the flexibility it offers by being able to be subordinated to bank debt and serve as a complement to capital.
Non-banking Financial Institutions
Among some of them, the well-known non-banking institutions that generally grant loans to companies that do not have access to bank loans. The amounts are generally smaller, although with higher rates than those of the banks. They are ideal for SMEs that do not have other financing options.
Mezzanine Financing
The term mezzanine refers to one of the sources of financing that occupies an intermediate place between debt and capital in terms of risk and return. It complements bank debt by providing resources for growth projects that for some reason are not financed by banks. Supplements capital by providing undiluted resources to current partners. It adapts to the specific needs of companies that require this type of long-term financing.
These are just some of the most frequent sources of financing that companies can access, however, it is important to obtain information and advice before making a decision in order to determine the most appropriate type of financing for our company.
