New Jersey Enterpreneur - Small Business, Entrepreneurs and Venture Capital

When and how to expand your business is the most important decision you will make in your entrepreneurial life. When access to cash is vital for growth, an analysis of your options is essential. One choice is when to sell equity and accept the resulting dilution of ownership. The extent of dilution resulting from the sale of equity depends on your company?s valuation. If you do not have to be the first to market or do not need the connections that appropriate venture capital investors often contribute, than consider delaying the use of equity until your company is further along in achieving its goals and has a higher valuation.

Factoring is one form of Accounts Receivable Financing which is the advancing of funds to a company by a lender in anticipation of repayment through their collection of the payments of the company?s invoices (known as accounts receivable). The lender (known as the Factor) will charge a fee which is a combination of interest for the money advanced and their administrative costs of processing the collection of a company?s accounts receivable. The factor will evaluate the type and size of a company?s accounts receivable to determine the general quality of credit of the customer invoices, as well as the invoice volume and amounts which affect administration and processing costs.

Angel investors are individuals who invest in entrepreneurial businesses at a very early stage of their startup and growth. The startup and growth of an entrepreneurial enterprise typically is broken down into five stages: the Concept (or Seed) Stage when the business is being organized by the entrepreneur and financed from personal funds and Stages I through IV which begins with the sale of the product and ends at Stage IV with a high growith operation that is attractive to outside buyers.
 

Business ventures vary from home based businesses to corporate spin offs, but all share one challenge, how to identify and obtain sufficient funding to start and grow their business. When seeking outside funding for a new venture, the individual with little experience in this area should apply some common sense as to what they themselves would require if they were approached for money.