1, policy fund
Venture funds provided by the government are usually highly concerned by all entrepreneurs. Its advantage is that you don't have to worry about investors' credit when using government funds, and government investment is generally free, thus reducing or eliminating financing costs. However, there are strict reporting requirements for applying for venture capital funds; At the same time, the government's annual investment is limited, and fundraisers need to face competition from other fundraisers.
2. Family financing
The most common, simplest and most effective way for individuals to raise venture capital is to borrow money from relatives and friends, which is a way of debt financing. Its advantage is that borrowing money from relatives and friends generally does not need to bear interest, that is to say, borrowing money from relatives and friends has no capital cost. So this method only increases the inflow and outflow of cash when borrowing money to pay back the money. This method has the advantages of fast financing, low risk and low cost.
3. Partnership financing
Looking for partner investment refers to a financing way and method to directly attract units or individuals to invest in partnership enterprises according to the principle of "* * * has investment, * * has operation, * * * has risk and * * has income". The advantage is that it is conducive to the utilization and integration of various resources, enhances the reputation of enterprises, can form production capacity as soon as possible, and is conducive to reducing entrepreneurial risks.
The disadvantage is that it is easy to have differences of opinion and reduce work efficiency, and there may be contradictions between partners because of unequal rights and obligations, which is not conducive to the stability of the partnership foundation.
4. Loans from financial institutions
Because banks have strong financial resources and most of them have government background, they have a "mass base" among entrepreneurs. Judging from the current situation, bank loans include mortgage loans, credit loans, secured loans and discount loans. The advantages of bank loans are that interest expenses can be deducted before tax, financing costs are low, and well-managed corporate debts can be renewed when they expire.
The disadvantage is that collateral is generally needed, and the funds raised by IOUs must be not less than 30%. Because the principal and interest must be repaid on schedule, if the business situation of the enterprise is not good, it may lead to debt crisis.
5. Venture capital
Venture capital is a brand-new investment method combining financing and investment. It means that entrepreneurs get a sum of money by selling some shares to venture capitalists, which is used to develop enterprises and open up markets. When the enterprise reaches a certain scale, the venture capitalist sells his own shares to gain income, and then makes the next round of investment.
Many entrepreneurs use venture capital to help enterprises get through the initial stage. The advantage is that it is conducive to the financing of related projects with high technology content, innovative business model operation, luxurious team background, good cash flow and rapid development. The disadvantage is the limitation of financing projects.