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You are currently the owner of an enterprise that you developed as a start-up. You own 80% of the firm’s equity and four external investors own a further 20% of the business. The business you have developed provides a technology based invoicing system for small businesses. This is currently earning positive profits. You have plans to scale up the business so that a period of high growth can begin during its third year of business. The external investors are friends and family members that have no finance expertise. You have called a meeting with the external investors to outline your funding plans. The four external investors have strong opinions and each have suggested different types of investors you should target for funding.
In a short report outline briefly the various different sources of funding that might be available to the enterprise identifying their strengths and weaknesses for the business.
The additional funding is required to be in place by the end of its third year. Critically evaluate the factors that should be considered when deciding which type of funding source to target and assume you will present the arguments to the external investors at your meeting. The report will provide the basis of your discussions. Ensure you choose one source that is your preferred funding source and explain why to the external investors.
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