The Fund for Electronic goods recycling project - Essay Example

Discussion Available funding bodies Small business owners need to rely on investors for financing their activities. For any start-up of a business or introducing a new product, upgrading of equipment, investors are required to help provide the company with funds. There are several types of investors for a business. They are as follows. Angle Investors Angle investors are basically affluent individuals who provide funds for a business start-up. He usually does it in exchange for ownership equity or convertible debt.

An Angel investor follows his basic instincts and accordingly invests in businesses which may otherwise face difficulties in attracting other investors to fund their operation. In some cases they want to get a share of their investment in case of profit by the business. He will want a certain predetermined percentage of his investment or in other cases in may want partial ownership of the business in which he has invested, or in other cases management decisions. Angel investors invest typically from hundreds or thousands to a few million dollars.

Advantages of angel investors Most angel investors can provide business with the ability to generate small amounts of money needed. It can be less than $5, 00,000 or even upto $ 1 million. Since most early ventures require small amount so money, Angel investors can provide them with this amount from their own personal source of funds. When entrepreneurs have exhausted their supply of money from family, friend, bank loans, personal savings and credit cards for their start-up business they can seek the help of angel investors to help fill the equity gap needed to do the business.

Angel investors are more flexible in their business arrangement as compared to traditional source of money lenders like venture capitalist and banks. Since they invest their own money it is possible to negotiate their business deals. They also don’t require highly monthly fees as required by banks and credit cards. Angel investors typically invest according to their own risk. Hence it is considered as high risk business investments. Since there is no record of company success for the new start-up, the angle investors is perfect for start-up.

Also nowadays Angel investors are typically located everywhere across all the industries. Disadvantages of angel investors Angel investors typically do not make follow on investments, because of the risk associated with reinvesting is even more for an unsuccessful company. Angel investors can sometimes be deceptive. Though majority of the angel investors can look beyond the return of their investments, there are few angel investors who are greedy and want more money in return rather than promoting good for the company.

Also they tend to be less patient with new entrepreneurs and hence don’t provide them with proper guidance or mentoring in their early stage of the business. Sometimes the return on investment which they want can be costly. Peer-To-Peer Lending Peer-to-Peer lending which is also known as social lending, person-to-person lending is the process of lending money to its peers also known as unrelated individuals, without going through banks or other financial intermediary (Mu and Gnyawali, 2003, pp. 689-711). These types of lending typically takes place online on company’