Raising Capital - Assignment Example

Raising Capital Raising Capital Introduction It takes talent, determination persistence and hard work to start up a business. In addition, a lot of research and planning is required. Self-appraisal is very important before starting a business. It helps one understand his strengths and weaknesses. It also helps in assessing the personal goals to determine if the business will work for u. Survey of current and the potential entrepreneurs suggest that inadequate capital is one of the major challenge in starting and maintaining a new business.

Capital market depth is the key factor that affects the entrepreneur’s ability to finance their startups (Kerr and Nanda, 2009). Underfunding is the major challenge facing new and existing business. Most entrepreneurs borrow enough money for setting up a business, but they lack extra cash to help in operations during the startup phase, when cash outflow is higher than the cash inflow (The Entrepreneurial Dialogues, 2015).Major Challenges Faced By Entrepreneur in Raising Startup Capital and Ongoing Capital1.

Discrepancies in matching funding mandates and the entrepreneurs eligibility The fit between the capital providers and the business seeking for capital is usually problematic. In most cases, there exist large disparity between the financial and the economic status of the business seeking capital and the requirements of financial options available to different funding groups. Some entrepreneurs submit applications that are not consistent with the funder’s mandate.2. Inability to form unique business modelsOften, entrepreneurs who operate in highly saturated markets that make the differentiation hard approach funding agencies.

The agencies find business in high-saturated areas unattractive since it makes it hard for entrepreneurs to come up with unique business opportunities3. Entrepreneurs lack awareness and preparednessThe issue here is the length of time it takes to access the funding. Most entrepreneurs lack awareness about the procedure and courses of action involved in getting equity funding. The process in some institutions tends to be bureaucratic and heavily laden with red tape and protocols as funders endeavor to get confidence and assurance when granting the funds to entrepreneurs.4. Expectations management among the entrepreneursMany entrepreneurs expect the funding process to be quick and easy.

The unprepared entrepreneurs applying for the capital facility end up disappointed and frustrated with the process ReferencesKerr, W. R & Nanda R. (2009). Financing Constraints and Entrepreneurship. Harvard Business School. Web. February 10, 2015. Retrieved from http://www.hbs.edu/faculty/Publication%20Files/10-013.pdfThe Entrepreneurial Dialogues (2015). State of Entrepreneurship in South Africa. Web. February 10, 2015. Retrieved from http://www.gibs.co.za/SiteResources/documents/The%20Entrepreneurial%20Dialogues%20-%20State%20of%20Entrepreneurship%20in%20South%20Africa.pdf