Question

Describe, explain, and give an appropriate example of the three sources of capital in new venture creation. (source of capital-exp: personal, friends and relatives, venture capitalists and bank).

Answer 1

Answer-

Three sources of capital in new venture creation are:

1. Personal investment

When starting a new business, the principal investor ought to be simply the individual, either with own money or with insurance on the advantages.

This exhibits to the investors and bankers that one has a drawn out responsibility to the undertaking and hazard taking ability.

For instance, using continues and savings from the last business can be utilized as the investment/capital in the current business.

2. Love cash

This kind of capital originates from relatives, guardians, and friends. the cash can be taken legitimately or b some other methods.

Something essential that must be considered in such capital is that there is restricted accessibility of capital/reserves.

For instance, any family member or relative can be value in the business.

3. Government awards and sponsorships

Government institutions give financing, for example, awards and appropriations that helps in the business.

For the most part, most awards expect one to coordinate the store required and accessible.

For instance, an examination award may expect one to find just 40% of the absolute expense and not every last bit of it.

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