The fundraising process for a startup business can be a long and daunting one. Young entrepreneurs have the difficult task of tracking down investors who are both interested and right for their business, and then provide them with the information they need to make an informed investment decision.
But what is the reality of all the investment choice available for any? Well, this article tends to provide answers to it.

#1. BANK LOAN
Most banks provide loans for startup businesses/SME, but difficult lies from the proper disclosure of information during application to the availability of substantial collateral by applicants. Entrepreneurs may decline from providing detailed information on their proposal for fear that such disclosure may compromise their intellectual property, or result in piracy. The lack of adequate information about a proposed SME segment is likely to result in the rejection of a loan application.

Also most formal financial institutions, like banks, require assets like land, building, vehicle, and share certificates as collateral, while informal sources of funds, require guarantors or groups, to serve as collaterals. The need for collateral, by both the formal and informal financial institutions, is a major obstacle to startup funding, as many of them are unable to come up with the collaterals demanded. Many SMEs, in developing countries, possess movable assets, such as the goods they produce, their machinery, their account receivables, intellectual properties’ rights, etc., which are used by firms in advanced economies, as security to obtain bank loans.

However, most of these assets cannot serve as collateral in developing countries because of their unsophisticated collateral system. As a result for instance, about 99% of movable assets that could easily serve as collateral in the United States are not acceptable in Nigeria.

#2. EQUITY FUNDING

In finance, in general, you can think of equity as ownership in any asset after all debts associated with that asset are paid off. Equity funding refers to any means of financing your business in which you receive money in exchange for ....CLICK BELOW TO CONTINUE READING ON OUR BLOG
http://blog.adverbusiness.com/truth-about-finding-investorsfunds-for-your-business/