Modern Management: concepts and skills, 14/e

Financing Exploitation

When entrepreneurs decide that an opportunity is worth exploiting, they often lack the capital (i.e., money) needed to exploit the opportunity. Although some entrepreneurs fund their operations with their own money or with credit cards, most entrepreneurs require at least some external money to fund their operations. In this section, we review three primary sources of external capital for entrepreneurs: angel investors, venture capitalists, and bank financing.

Angel investors are wealthy individuals who provide capital to new companies.35 Angel investors may include an entrepreneur’s family and friends, but angel investors are also private individuals who did not know the entrepreneur prior to funding the opportunity. ...