2015

Capital Funding
A review and comparison of Angel Investors,
Early and Later Stage Seed Funding Venture
Capitalists, Public Private Partnership,
Corporate Risk Capital Fund and
Crowdfunding
A review of the contemporary capital funding options and sources to support
businesses, enterprises and entrepreneurs at different stages of life cycle with a
comparative review of key indicators like size of venture fund, number of
investments, types of industries, types and sizes of companies invested in, major
factors for evaluating potential investments, valuation methodologies and
application procedure and financing types and success rates.

user
3/8/2015

A Report On Capital Funding for Businesses and Entrepreneurs

Table of Contents
Introduction .................................................................................................................................................. 3
Crowdfunding ........................................................................................................................................... 4
Angel Investors.......................................................................................................................................... 5
Public Private Partnership......................................................................................................................... 6
Corporate Risk Capital Fund...................................................................................................................... 7
Early and Later Stage Seed Funding Venture Capitals .............................................................................. 8
Contemporary Financing Entities.................................................................................................................. 9
CircleUp ..................................................................................................................................................... 9
SierraAngels .............................................................................................................................................. 9
Finnvera .................................................................................................................................................... 9
Petra Capital Partners ............................................................................................................................. 10
Centripetal Capital Partners.................................................................................................................... 10
Comparative Statement .............................................................................................................................. 11
Conclusion ................................................................................................................................................... 16
Bibliography ................................................................................................................................................ 17

A Report On Capital Funding for Businesses and Entrepreneurs

Introduction
Young entrepreneurs find it very challenging to get funding from contemporary financing channels and
institutions to finance their unique business ideas. Established financing institutions lack of interest in
exploring entrepreneurial potentiality have taken such a conservative form that newer breeds of capital
financing have emerged on the horizon over last few decades. Especially since the wide spread-out of
social media and people contacts over internet has made the growth of KickStarter, GoFundMe,
IndieGoGo etc as part of modern financing history. This paper describes such five capital financing
options for innovative business minded people, entrepreneurs and young startups with their instances
in detail.
Before moving to describe each financing options available to modern enterprises and entrepreneur this
would be essential to elaborate the development of such financing. Banks play traditional role of
financing to commercial and customer sectors however, they are more regulated and have operating
costs. Therefore they cannot always make quick investment decision or avoid their banking formalities.
For new startups and business concepts it is not always possible to offer collateral or share the
ownership. Again, there are individuals and business with myriad of idle money who are keen in making
short run investment to get number of times higher return. Such prevalence of business interests and
needs of capital financing and funding sector have contributed towards the development of newer types
of financing arrangements that bypass the traditional lenders and borrower concepts in principles.
Technology, market insight, business potentiality and other key elements have emerged up to be a
equally strong foothold for investment that traditional capital funding sources could not ignore. Given
the prospect of new forms of enterprises and financing needs newer range of capital funding and
financing options emerged in response to the growing demand for it. Angel investors, venture capitalist,
public private partnership, early and later stage seed funding financiers, incubators, microfinancers, etc
established themselves to be alternative financing sources for business. They have proved the worth by
venturing many global brands and have also witnessed incremental growth in their own business.
For enterprises and businesses the alternative capital funding sources have opened wide avenue in
funding to support them in taking risk, to grow and to exit safely. Businesses and enterprises are now
better protected and cared.

A Report On Capital Funding for Businesses and Entrepreneurs

Crowdfunding
Crowdfunding stands for networking individuals who pour their money to support any initiative on
internet platform by any entity. It is an adapted form of crowdsourcing and differentiates itself by
focusing on the intent of the concept that to be funded through individual contributions. CircleUp stands
as one of the most popular crowdfunding service at the moment.
The term Crowdfunding was first coined by Michael Sullivan in 2006 in his famous fundavlog and since
then the concept of crownfunding kept evolving where by financing a project or venture by individual
monetary contribution of large number of people became to be its essential characteristics. Irrespective
of profit motive, the crowdfunding has been used to generate cash support and capital support for
projects, products, services, causes and enterprises and development organizations. Generally it
requires stake from three parties, the concept provider, the follower of the concept and a mediating
agency. Nowadays internet websites that work as crowdfunding platform are functionally playing the
role of mediator as an adaptation of the fund raising agents role. In 2013 the crowdfunding industry
grew to nearly 6 billion US$ venturing fund size with millions of individual monetary contributors behind
it.
Contemporary crowdfunding initiatives are of five types. The charity based crowdfunding gather funding
for a charity cause where investors ideally do not look for return from their investment and it works
more on donation principle. Another type of crowdfunding is legal in its jurisdiction it is called the
litigation crowdfunding where investors invest in legal battle for lawful rights claim. A legal recognition
in the case will offer some benefits for the stake holder investors. The third type of crowdfunding are
based on individuals borrowing requirements and terms. A person makes his borrowing appeal to group
of people and seek to get lenders bypassing the contemporary financial lending institutions and
channels. Once a group of investor accepts the borrower terms the funding occurs. Such crowdfundings
popularity is on rise these days. The fourth type is based on equity sharing and much related with
businesses, enterprises and entrepreneurs where a business seeks funding from others in exchange of
equity sharing. The last type of crowdfunding occurs on the basis of rewards but this is much limited to
creative fields and arts. A creative project gets initiated and looks for crowd funding from aspiring
investors.
Crowdfunding stands as the most popular form of venture capital funding source and arrangement and
have contributed to millions of businesses in different scales at different levels.

A Report On Capital Funding for Businesses and Entrepreneurs

Angel Investors
In general terms Angel Investors are those individual or group of individuals who invests in start ups in
exchange of ownership stakes. Generally the angel investors belong to affluent class of people who can
decide to individually invest in any venture or form a group with other investors as angel investors group
to invest in relatively larger venture. In either cases, the angel investors get their right over the equity
stock of the business and enjoys debts convertible rights. There are networks of angel investors group
so if a group require funding or prefer to minimize risks on the venture it can seek more investment
from the network. For angel investors the sources of their funds can be anything starting from their
family heredity to proceeds from business.
A good aspect of angel investors venture up is that most of their seed funding to start ups across the
globe have proved successful and remained sustainable. Therefore whenever an angel investor is
approached by an applicant entrepreneur he needs to convince them in their terms. Generally angel
investors work as the alternative to contemporary capital funding sources and channels. It is rather seen
as the takeover of an entrepreneurs closer circle of people like friends and family with even better
financial proposition. Normally these funding ranges upto a few million while the same from the family
and friends could have reached a few hundred thousands only. The advantage is that the entrepreneur
gets better chance to manage his finance. The angel investors often run rounds of funding whereby it is
again possible for the entrepreneur to seek more funding from the angels. However, unless a business is
highly growing it is challenging to seek angel investors.
Dealing with angel investors can be compared as dealing with individuals since each angels terms of
funding is different and their interests and targets are also different. Some may decide to get ownership
stake while many can withdraw the fund in number of times after certain period. Opportunities for
entrepreneurs lie within the terms, negotiation and amount that they seek from the angel investors
because the angel investors usually do not hold any preference for industry association as they are
available in large numbers. What they count is how the money is being used and how much of money it
is going to create in return for the angel investors. No indefinite period of funding occurs here but if
required the angel investors can step up in supporting a venture with likely more funds. An ROI and IRR
of 20 to 30 percent is natural to bag an angel investor deal for any business. Prominent angel investors
who are already in venture financing would seek even higher returns like 10 to 20 times of their
investments. So, entrepreneurs must understand that angel investors can be a good source and an
expensive choice to deal with.

A Report On Capital Funding for Businesses and Entrepreneurs

In the US, the angel investors preferences are for high-tech industries whether in IT or health care or
others and angel investors have flourished up sectors with billions of US$ while for UK, thousands of
angel investors are in to angel funding worth millions of GBP. A general understanding of the angel
investors for capital funding requirements in startups or as seed fund is to stay far from the much know
angel and to approach an angel known to little and of common interest with the entrepreneurs
business.

Public Private Partnership

The public private partnership stands as a shared initiative by a government and its private sectors
whereby business ventures are funded and operated on shared basis. The World Bank is the strong
advocate of public private partnership as for its research findings revealed that for untapped industries
and sectors which are of immense importance to a economy can require more collaborative effort with
the private entrepreneurs. In such cases, the government usually go for PPP with the private sector
which not only minimizes the risks for individual or group of private sector investors but also help in
injecting funds necessary to revolve the sector in sustainable manner. The Finnvera by the State of
Finland and its private sector is one of the most successful PPP in capital funding.
A contract is initiated in PPP, which is also known as P3, between the public and private sector where
the private sector initiates the contract under the expressive interest of the public sector that is the
government. In such projects the commercial interest of the private sector needs to be equally
addressed with the socio-economic interests of the public sector. It means while the undertaking
projects would be commercially viable for private sector at the same it also needs to meet the socioeconomic targets of the economy. To whom PPP would be a great choice as a capital funding option
depends solely on the individuality of the cases. For instances in underdeveloped economies the PPP is
initiated in large value projects generally in construction and infrastructural development sector. in such
economies there are would be very few entrepreneur who would be planning to go in PPP with the
government in such projects. Contrary to the underdeveloped economies, in rich economies like in the
Scandinevia, the PPP would be more targeted towards encouraging the individuals commercial interest
and would take different forms of trade and business support. Therefore, PPP does not fit in all case
equally.
Another important aspect of PPP is that the partnership with the government which can result in
creation of everlasting streams of benefits for anyone. Certainly in PPP the taxation is lesser in the

A Report On Capital Funding for Businesses and Entrepreneurs

context, there could be mutually agreed fund withdrawal or annual revenue sharing, and other major
benefits which can in effect favor an entrepreneurs other businesses. Compared to the other capital
funding described here the PPP is rather more developmental than being commerce driven.

Corporate Risk Capital Fund

Corporate risk capital funding refers to those investment decisions where the risks are extremely high
with relation to high return on it. The basic difference of such firms with other capital funding firms is
this, investment under the corporate risk capital funding can either be successful to grow in size in
multiple times or it can fail to dwindle down into a fraction of the initially invested amount. Such
companies do not grow any pattern or trend of investing into same industry repeatedly but they pose
greatly valued industry insight prior investing to each case.
Corporate Risk Capital Fund can be explained as the capital required to engage the losses that are
unexpected that have occurred due to various events within a year of newly launched operation or
running concern. Here the losses are categories under multiple consideration and defined separately.
For instance the economic losses could be defined as losses that appear on the income statement and
on financial statement that have adjustments on the value. These losses are not captured when there is
no decline in the value as mentioned in the income statement. Contrary to the economic losses there is
unexpected losses which indicate those losses that happen between the differences that take place
between the serious losses and the average loss. Extremely severe is defined as the current loss that is
measured at 99.97% confidence level that is based on the events and analysis of the scenario that is
distributed. Economic losses are risks that are catagorised as credit risk, market risk and operational risk.
Credit risk does include cross border risk and it results from a borrowers inability to cover his or her
obligations that are due. Market risks includes liquidity and the losses that arise due to fluctuations in
the value of the trading and non trading positions in the market which includes changes in the value that
results from fluctuations in the rates. Operational risk includes the legal and regulatory category and it
results due to insufficient processes, human factors, systems or due to any other external events. The
above risks are measured and are grouped within the business to facilitate the proper understanding of
our exposure to any extreme events. To have a proper understanding of developments in the market,
the framework for risk capital is being reviewed and developed. In January 2009, certain developments
were introduced for the treatment of operational risks and investments of the proprietor. There are
other developments that are being done and enhanced that would be completed within a year that is
mainly focused on the market risk. Now given the description of varying types of losses a new enterprise

A Report On Capital Funding for Businesses and Entrepreneurs

or an entrepreneur can think of any time to get a loss coverings and for this it can work like an short
term financing arrangements with regard the loss or risk itself.

Early and Later Stage Seed Funding Venture Capitals

Seed funding irrespective of its funding stage can be referred as the secured offerings from the
investors for a business and its entrepreneur. Since these are usually funded in the start up stage of a
business these are called seed money. The impact of seed funding can grow exponentially where by a
business will start to make its own money out from selling its products or services and will eventually
grow into a position whereby it can invest into its future sustainability. Money from friends, families to
start a business are also seed funding.
Now seed funding can be done in different stages of an enterprise like as seed fund, start up, growth, on
the basis of rounds, for expansion and exit. The one that are funded at the initial stage of a business
operation prior its functional and accounting growth are called early stage seed funding. If the funding
comes from an institution than an individual then it would be called the early stage seed funding
venture capital. Contrary to early stage seed funding, when a business grows and it require more
funding to support its growth and economic activities it require later stage seed funding. These stage
based funding follows some criteria for distinction for instance, initial seed funding refers to equity,
while start ups early stage seed funding is all about the fund meeting the costs associated from the
marketing and product development and administrative purpose prior lunching the business activity.
Equally the growth stage funding will stand to support the sales in the form of manufacturing support
funding. The second round of later stage funding involves meet up of the working capital needs.
Expansion stage funding indicates financing needs to get a new venture or to acquire the competition.
The last part of the later stage seed funding is all about financing the costs for a business to go public
through initial public offerings. So, it can happen in all six phases under the common title of early and
later stage seed funding venture capital.

A Report On Capital Funding for Businesses and Entrepreneurs

Contemporary Financing Entities

Under the contemporary financing entities section prominent capital financing entities like companies,
platform, initiatives or programs are reviewed in brief. Each example represent the specific type of
capital financing they practice. For instance CircleUp is a crowdfunding example, SierraAngels is an
example of Angel Investors while Finnvera is an example of public private partnership. Seemingly Petra
Capital Partners and Centripetal Capital Partners are example of Corporate Risk Capital Funding and
Early and Late Stage Seed Funding Venture Capitalists respectively.

CircleUp
CircleUp is the crowdfunding platform that bridges nominated investors with innovative companies in
retail sector and the consumer. It is based on equity crowdfunding and started its operation in 2011.
Here the investors get equity right in exchange of their investments and therefore the materialization of
fulfilling the funding is much higher on this platform. Its investors are all accredited therefore the service
is highly popular among the fund seeker entrepreneurs.

SierraAngels
Established in 1997 in Nevada Sierra Angels are group of professionals and entrepreneurs who extends
financing support to start ups. However in addition to provide financing support the Sierra Angels also
provide mentoring and strategic guidance to companies. Entry to the group of investor in Sierra Angels is
based on invitation only. It has strategic affiliation with the Angel Capital Association and the Angel
Resource Institute therefore the invitation based membership here is of great value. Sierra Angels is
more concern over the innovativeness of business concept and emerging business sectors for funding.

Finnvera
Finnvera is a Finnish capital financing service that funds enterprises at growth, start up and for
internationalization. It has multiple arrangements like venture capital investment, export credit, loans
and domestic guarantees. It is run and managed by the State of Finland. Finnvera was founded through
merger of Kera PLC and the Finnish Guarantee Board back in 1999 and since then it operated in regional
capacity get preference over Finnish business, trade and commerce at Europe wide exporting. The
company grew exponentially in 2011 to have over 2 billion invested alone in exporting while the
company also managed to keep a stake of its presence in the financial sector by issuing 200 million Euro
worth bonds.

A Report On Capital Funding for Businesses and Entrepreneurs

Petra Capital Partners

Petra Capital Partners was established in 1996 in Nashville, TN and is working as a corporate risk capital
funding firm since then. According to Petra Capital Partners are engaged in growth capital investing and
they are doing it for more than 20 years now. Throughout this period their investment summed up to
more than five hundred million dollars and at any point of a business year they can invest upto 20
million $ to any single company. The company does not have any specific financing structuring rather
they are flexible in the arrangement and can invest to subordinate debt and to secure equities.

Centripetal Capital Partners

The term centripetal is derived from a Latin word which mean center seeking force. It is a multi stage
venture capital funding company seeking opportunities to grow its capital through investment in
companies as seed stage, early stage, growth stage and late stage. It houses a group of talented
financiers, executives and private investors to help entrepreneurs and enterprises with limited number
of partners and wide support across various industries. The company has its own team and affiliates
besides the members to seek interesting investing opportunities at any stage of a business. The firm
thrives to seek the right man, with the right business and on the right time for Centripetal Capital
Partners to step up with its investment.

10

A Report On Capital Funding for Businesses and Entrepreneurs

Comparative Statement
Comparative Statement

Criteria

Crowdfunding

Size of Venture
fund

Number

of

investments per
year

Types and sizes

of

companies

invested in

Angel Investors

Public Private

Corporate Risk

Partnership

Capital Fund

Early and Later

Stage Seed Fund
VC

Since its inception

CircleUp has invested
millions of US$ to
different retail and
consumer
focused
companies.
The
investors are allowed
to invest as low as
1000 US$ and anyone
with
annual
individual 200K US$
income and 1 million
$ worth property can
sign up to be CircleUp
investor. According to
Nevada Department
of
Business
and
Industrys Access to
Capital
Resource
Directory
2014
investment of 1 to 10
million
US$
are
typical to capital
seeking companies.
There is no fixed
number
of
investment per year,
rather it is more
about the prospect
each companies hold.

Sierra Angels can

invest 250K US$
to 2 million US$
per venture.

As of December 31,
2014 Finnvera has
over 2.8 billion
Euros outstanding
commitment
in
SME financing and
12.2 billion Euros in
export financing.
Currently there are
28800 customers.

Petra
Capital
Partners
can
invest upto 20
million US$ in
single
venture
from
the
companys own
capital however
where there is
more
growth
opportunity the
company
can
arrange for more
funding. At the
moment
Petra
Capital Partners
are running its
fourth round of
funding
worth
230 million US$.

Centripetal
Capital Partners
funds in multiple
stage therefore
it has different
investment size.
For instance, in
its each round of
funding it invests
from 1 to 3
million US$. For
a company in its
life time the
funding round
will
account
total 7 to 10
million US$ per
company. And
for acquisition it
invests 5 to 10
million US$.

There
is
no
complete figure
available
on
number
of
investments made
by Sierra Angels
per year however
its presentation
dinner is held at
every six weeks
interval
where
only
two
prospective
entrepreneur get
the chance to
make their case
for
capital
financing.

Over
2208
enterprises were
financed at growth
level and 3247
start up enterprises
in 2014 while the
SME financing was
1003 million Euros
and export credit
was 5034 million
Euros.

There is no clear
data of how
many
investments are
made each year
by Petra Capital
Partners but its
corporate record
shows that since
its inception the
Petra
Capital
Partners
have
invested
more
540 million US$
in
94
highly
growing
companies.

It makes 3 to 5
investments per
year.

CircleUp invests in
those companies who
are slightly little to be
approached
by
reputed
capital
financing companies

Till date Sierra

Angels have invest
into more than 60
companies
in
Media,
health
technology,

The
Finnvera
entrepreneur loans
are targeted to any
sector
except
farming,
realty,
forestry
sectors.

Petra
Capital
Partners
investment
is
focused
in
business
and
healthcare

No

specific

preference

but

interested

in

companies with

11

A Report On Capital Funding for Businesses and Entrepreneurs

Factors
evaluating
potential
investments

in

and industry wise

who are always a
prime target for
industry leaders to be
acquired or merged
in following sectors
like
food
and
beverage, beauty and
personal
care,
apparel
and
accessories,
household products,
pet care, consumer
electronics,
and
retail/restaurants. In
terms of size they are
mostly small scale
enterprises.

cleaning
technology, IT and
software
industries.

However,
any
other industry that
is beyond the reach
of contemporary
financial
institutions are also
the one where
Finnvera
holds
strong interest in
investing.
Generally,
these
loan amounts vary
with upper limit set
to 100000 Euros.

services
industries
however
in
recent days they
are
also
interested
in
business process
outsourcing,
information
services, media
and
communication
industries.
It
invests in post
venture and prebuyout
phases
only.

multiple revenue

CircleUp is very picky

in
evaluating
potential
investments.
According to it, only a
small percentage of
all
applicant
companies go under
funding
from
it.
CircleUp exclusively
looks for innovative
consumer and retail
companies
with
potentially
and
revenue record for
success.
CircleUps
factors in evaluating
potential investments
include:
Selective
dealflow preference
Market
sector
Financial
strength
Brand
strength
Product
diversification

Sierra
Angels
preference
are
those investment
potentials that are
from
the
software,
internet, wireless
IT, social media,
health
technology, clean
technology,
technology
innovation
and
alternative
investments. Its
funding
scopes
are geographically
limited
to
companies
in
Nevada, California
and surrounding
locations. Sierra
Angels consider
potential
investments
technical
superiority,
sustainable
competitive
advantage,
IPR,
strategic
partnership,
market potential
and
realistic
scalability options,
management
expertise, skills,
coach-ability, exit
strategy,
customer

Finnveras
evaluation
for
potential
investment
involves ensuring
the limited liability
status
of
the
company
where
the applicant must
be having atleast
20 percent of all
voting
and
shareholder rights.
At the same time,
it must also comply
with the basic
general guideline
of
preferences
detailed by the
EUs SME initiative.
Applicants do not
need any collateral
to
deposit
as
Finnveras
financing decisions
are solely based on
the prospect of the
business.

Petra
Capital
Partners
investment
evaluations are
based on growth
explosiveness,
presence of noncontrol investor,
presence of no
shareholder
liquidity, absence
of
negative
cashflows,
positive EBITDA
and
buyout
prospect
and
ownership
control.

5 to 10X return

Manageme
nt team
Valuations
and terms
Exit
prospects

streams.

potentials

12

A Report On Capital Funding for Businesses and Entrepreneurs

Firm

valuation

methodologies

Requirements on
proposal

Though such clear

data on the firm
valuation
methodologies were
not
available,
CircleUp
extended
the context broadly.
According to it, a
private
equity
investor assessment,
industry consultant
insight, third party
data,
deal
flow,
market relationship,
revenue size, revenue
growth pattern, gross
margin, cash burn,
balance
sheet,
branding
leads,
recurrence of repeat
sales, management
teams and its buyout
potentiality are all
considered.

According
to
CircleUp,
it
concentrates
on
companies
with
brand potentiality for
its products that are
tangible and are
available through a
retail
distribution
system. An interested
entrepreneur
applicant
seeking
capital funding needs
to list his company to
CircleUp through its
initial
assessment
system. Once the
initial
assessment
results to be a good

acquisition cost,
channel
development
strategy, financial
project, margins
in sales, use of
proceeds, returns
and valuation.
Sierra Angels firm
valuation
methodology
looks
for
consistency
in
companys overall
status like its risk
to reward ratio,
use of proceeds,
return potentially
in the matrix of 5
to 10 times over 3
to 5 years time
span.

Sierra Angels has

5 steps for an
entrepreneur to
get funding which
starts with filing
an
application
through
any
collaborating
partners of Sierra
Angels.
The
application must
contain company
overview,
financial
data,
business plan and
other necessary
documents. Upon
submission
of
application it goes

Finnveras
perspective
of
financing is slightly
different
that
others
as
it
believes
entrepreneurs
seeking
funding
must be having a
complete financing
plan
for
the
business. As such
applicants funding
request
from
Finnvera is just
only one part of
the entire financing
plan
and
that
financing plan can
should
include
complete targets,
strategies, plans,
market situation
assessment
and
should
clearly
visualize how the
financial plan is
going
to
get
returned
with
profitability
and
sustainability.
Finnvera
has
downloadable
application
form
on its website
which needs to be
filled up with all
required
details
and submitted to
the site. Upon
review
of
the
application
form
Finnvera it will
make contact with
the applicant to
describe the future
procedures.

Petras
firm
valuation
depends
on
number
of
criteria
like
proven
management
team,
revenue
above 10 million
US$,
positive
EBITDA, growth
rate more than
20%, high gross
margin,
restrictive capital
expenditure
in
recurring nature
and
highly
recurring
revenue.

Return prospect,

There is no such
details
about
entrepreneurs
proposals length,
structure
and
details
requirement
however
interested parties
need to contact
Petra
Capital
Partners to make
their cases.

Need to submit

competitive
advantages
sustainability
and

multiple

revenue stream.

initial pitch on
the

website,

once

okayed,

followed up with
other
procedures.

13

A Report On Capital Funding for Businesses and Entrepreneurs

Types
financing

of

fit for CircleUp, the

company investigates
the
data
and
information provided
by the entrepreneur
and
completes
documentary
formalities.
Upon
completion
of
documentary
formalities known as
Engagement Letter,
CirculeUp gives the
entrepreneur access
to
the
CircleUp
whereby he needs to
upload all relevant
information
about
the
company
including
financial
data, company profile
and others to submit
for
review
by
CircleUp.
Then
CircleUp review the
profile and activates
it for fund raising
among the investors
by the entrepreneur
himself.
It
is
important
to
understand for the
applicants that a
strong
financial
position
of
the
applicant company is
essential to attract
investors.
CircleUp
guidance mentioned
500K US$ worth
monthly transaction
for previous year and
500K US$ in revenue
as a base criteria in
this context though
management teams
professional expertise
in the sectors are
equally weighted.
CircleUp uses equity
based
financing
model
where
minimum is invested
through group of
investors. No parties
make payment of any
fees to the service as
long the 61 days

for review by the

screening
committee who is
tasked to explore
and match the
business idea with
market
potentiality. If the
screening
committee
approves
an
application
the
entrepreneur
receives
an
invitation to a
presentation
dinner followed
with question and
answer
session
and attended by
interested angel
investors. If the
presentation
dinner
goes
successfully then
the due diligence
procedure begins
followed by the
funding
steps.
Once
an
entrepreneur is
funded he needs
to report progress
to
the
angel
investors
on
quarterly basis.

The Sierra Angels

financing works in
multiple ways like
in cash, in kind
and
through
consultation and
coaching. Besides
single handedly
financing it can

Finnvera
offers
multilateral
financing
arrangements like
seed
loan,
internationalization
load, entrepreneur
loan,
Finnvera
loan,
financial

Petra
Capital
Partners finances
in two ways - the
growth financing
and
value
maximization in
exit.
Under
growth financing
it
withdraws

All

stages

funding.

14

A Report On Capital Funding for Businesses and Entrepreneurs

% of applicant
financed

money raising round

does not fulfill the
required investment
target.
If
the
investment target is
reached then the
applicant company
has
to
pay
commission to the
CircleUps
parent
organization Fundme
Securities LLC. For
investors the funded
amount remain held
in the escrow until
the target is being
reached and once
reached according to
their agreement they
will
enjoy
proportionate
ownership in the
company.
There is no such data
that what percentage
of applicants were
financed
but
according
to
CrowdFundInsider as
of September 26,
2014 CircleUp has
financed
40
companies with over
40 million dollars
since its inception.

work as your
financer lead to
arrange
more
funds from other
angel
investors
network
and
beyond.
Sierra
Angels termed its
financing
as
ecosystem
approach
to
support the start
up
entrepreneurship.

bridging
loan,
grants and bond
financing.
Also
there is a 3.25%
interest fee and six
months
grade
period
and
repayment can be
extended upto 10
years. Applicants
own share in the
stock is assumed as
a security and the
whole process has
a nominal fee.

when long term

revenue
is
sustainable and
under exit value
maximization it
cuts the reliance
on IPO and relies
on other financial
options.

We could not find

such data that
how
many
percentage
of
applicants
get
financed
but
Sierra
Angels
being an aged
investing
body
and with record of
financing
more
than
60
companies; it can
be said that Sierra
Angels are much
comprehensive in
making
their
financing decision.

Finnvera stands as
one of the most
popular financier in
the EU only due to
its flexible terms
and
supportive
nature.
It
has
strong number of
applicant who are
already financed
with billions of
Euros while few
billion Euros are
still left with the
organization
to
finance.
At
estimate 25% of all
applicants
are
successful
in
getting
funding
however
those
who require less
than 35000 Euros
are even more
highly successful in
securing Finnvera
financing.

There is no such
data on how
many percentage
of applicants get
financed through
Petra
Capital
Partners. Prior to
its fourth round
of funding, the
company
invested over 540
million US$ in 94
companies.

No such data is
available.

15

A Report On Capital Funding for Businesses and Entrepreneurs

Conclusion
In this report we have discussed different capital funding methods with their instances to different
questions. The intention was to familiarize the growing forms of capital funding and it included Peer to
Peer Lending, Incubator, Public Private Partnership, Crowdfunding and Angel Investors. Each has its own
way of working and purpose, while all of them are desperately looking to find that unique business
where they can invest the money. It is their form of business if they cannot invest in time, they will not
run profitably in the future. They will not be able to grow. And if an entrepreneur can present a
sustainable, unique and competitive leverage based business plan; these capital financers will jump in to
join the entrepreneur with their money. The fact is, there is money if one has a plan.

16

A Report On Capital Funding for Businesses and Entrepreneurs

Bibliography
Center for Strategy and Evaluation Services. (2002). Guide to Risk Capital Financing in Regional Policy.
UK: European Commission - Directorate General for Regional Policy.
Centripetal Capital Partners. (2014). Centripetal Capital Partners. Retrieved March 08, 2015, from
Centripetal Capital Partners: http://www.centricap.com/
CircleUp Network LLC. (2015). CircleUp. Retrieved March 08, 2015, from CircleUp: https://circleup.com/
Finnvera. (2015, January). Finnvera. Retrieved March 08, 2015, from Finnvera: http://www.finnvera.fi/
Investopedia LLC. (2015). Angel Investor. Retrieved March 08, 2015, from Investopedia:
http://www.investopedia.com/terms/a/angelinvestor.asp
Pelletier, R., Cuban, M., & Robbins, T. (2014, June 13). Getting Started With Angel Investing.
Entrepreneur .
Petra Capital Partners. (2013). Petra Capital Partners. Retrieved March 08, 2015, from Petra Capital
Partners: http://www.petracapital.com/
Sierra Angels. (2014). Sierra Angels. Retrieved March 08, 2015, from Sierra Angels:
http://www.sierraangels.com/
UK Crowdfunding Association. (2015). What Is Crowdfunding? Retrieved March 08, 2015, from UK
Crowdfunding Association: http://www.ukcfa.org.uk/what-is-crowdfunding
World Bank Group. (2014). Public Private Partnership. New York: World Bank.

17