Your finance options
Type | Pros | Cons |
Equity: You give a share of the company in exchange for investment. This may come from venture capital, private equity, angel investors, or other individuals (family and friends). | Benefit from experience and network of the investors. | Required to give away equity and a degree of control. |
Debt: Loans, bonds, guarantees. You pay interest on the amount loaned. This may come from a bank, other institutions or other businesses. | Many options available and no requirement to give up equity. | Potentially high interest rates (expensive) and businesses with little or poor credit rating may struggle. |
Alternative: A plethora of options, such as invoice financing, asset finance and leasing/ hire purchase. | Can free-up cash and reduce needed investment levels. | Complex, rarely suitable for retail or consumer-facing businesses. |
Crowdfunding and peer-to-peer lending: Accessing multiple small investors and lenders through technology-led platforms that also offer support and guidance. | Raise awareness of your business as well as finance. | Pulling off successful crowdfunding campaigns can be challenging. |
Grants: Small business grants or charitable grants and donations are available to a number of organisations. | A cash award that does not need to be repaid. | Arduous application processes and difficult to find the right opportunities. |
Bootstrapping: Self-funding and keeping costs to the minimum. | You won’t lose equity or incur high interest. | Can constrain growth based on the financial resources you have available. |