Startup Funding | Merits and Demerits

Merits and Demerits of getting funding for your startup

People have been looking for ways of on how they can empower themselves economically. One
of the ways is through entering into a business world but demands involved in starting one
overwhelms them. When opening a new business, there are a couple of things and has a financial implication.
Setting up the area and make it functional requires a lot of funds. This is where startups look for
the option of outsourcing the funds. There are pros and cons attached to the idea of Startup Funding as
highlighted below.

Merits of getting Startup Funding

Easy access to business capital

There are those financial institutions that their major role is to fund businesses. This includes
investors and loans from the bank. Acquiring of capital can be based on the size of the business
you want to venture into. The institutions give a certain period of time for loan repayment. If
the business makes a profit then you are able to repay their loan within the stipulated period.
Brings experts on board
One of the advantages of Startup Funding is that you get to meet to get expertise. They offer technical
skills that can be helpful to your business. Before and after receiving the funds they are always
on the ground to check on the progress. Their aim is to see your business grow and free from
any risks that might attack. Consultation about business ideas and any other advice can be done
anytime. Better decisions are therefore made.

Additional benefits

Startup Funding sources support business in the legal matter. Investors would like you to comply with
the law of the land so that their business is not also put into a risk. This ensures business
compliance.

Networks and linkages

Startup Funding attracts a lot of investors. Investors expose you to the external market world. More
clients through referral can be obtained. The network creates an opportunity to meet people
with brilliant ideas that are ready and willing to transfer the same skills for the help of your
business.

Demerits of getting Startup Funding

External control

Be assured that every single cent you get from investors will be controlled by them. No investor
would like to lose money, therefore, they have to monitor. Investors will always have a say in
your business. Depending on the cash obtained from them, this determines their percentage of
say in your business.

Minimal business ownership

Remember the capital of the business belongs to the investors. Therefore management of the
business will be partially owned by them. At some point, they dictate what you do. No
ownership until you completes repaying their money.

Time wastage

Looking for sources of Startup Funding might take quite a lot of time because of the processes and
procedures involved. Running up and down is a very tedious exercise. A lot of time is wasted
chasing for money that would otherwise be spend sourcing for customers and getting to
understand their needs. In bootstrapping time is spent wisely sourcing and familiarizing with
customers or analyzing market trend around your business area so as to boost business profit.

Burden to agreements

Every penny that you receive from an investor must be refunded. Before they give you cash,
they subject you to signing a lot of papers to lay down procedures for repayment. Signatures
should be appended to show that you are complying with the terms and conditions of the
funding. Failure to adhere to them can lead to unfriendly penalties

Some advice is given not viable

Not every idea that you get from investors is worth. Most of the time they give you ideas to
favour their business and not yours. You should be wise enough before implementing.

Conclusion

Investors can help boost your business idea but it is not a guarantee that you will succeed.
Before Starting a business, it is always important to analyze and get safe ways of getting Startup Funding
so you don’t get into trouble.

Read next article –

Best startup ideas for funding in this highly competitive world

Startup-India

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