Finance Business Initiatives: Challenges and Funding Options Report

This report examines the financial challenges faced by technology businesses and explores various funding options available to start-ups in this sector. The report identifies continuous technological changes and partnership decisions as significant challenges that deter investors. It then discusses bootstrapping and crowd funding as viable alternatives to traditional bank loans. Bootstrapping involves using personal resources to create a minimum viable product and refining it based on market feedback, while crowd funding, including reward-based and equity-based models, allows businesses to raise capital from a large number of individuals. The report highlights the advantages and disadvantages of each funding approach, offering practical insights into securing financial resources for technology ventures.

Running head: FINANCE BUSINESS INITIATIVES
Finance business initiatives
Name of the student
Name of the university
Author note

1FINANCE BUSINESS INITIATIVES
Table of Contents
Challenges faced by technology business for financing............................................................2
Available funding options for technology start-ups...................................................................2
Reference....................................................................................................................................4

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Challenges faced by technology business for financing
Tech organizations are bigger and more varied as compared to the others. This rapidly
growing and expansive field attracts the investors and venture capitalists. However, I found
that the technology companies face various unique challenges that the start-ups of other
companies may not have to face. Major challenges faced by the tech companies are as
follows –
 Continuous change – continuous changes in the technology as compared to other
industries lead to the start-up issues. Lot of pressures are there for quick move and
beating the competitor for finding a solution. Owing to these factors, investors think
twice before investing in tech companies.
 Partnership decisions – as the new business partnership with any other company from
the same field may sound great. However, as the stakes are comparatively higher for
the start-up of tech companies the operations can be ruined easily if the mainstream
technologies become obsolete. Therefore, as the chances of financial losses are
higher, most of the investors do not find the tech companies as profitable investment
option.
Available funding options for technology start-ups
I found that sometimes the tech start-ups find it difficult for using the start-up loan or
bank loan as the funding option. It may take long time for a platform or app for becoming
profitable. For instance, Twitter, one of the widely used social network still making loss in
each year. Some funding options for tech companies are as follows –
 Bootstrapping – this is a funding option that will use my own resources for generating
a product that is minimum viable and releasing that in the market as early as possible

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and thereafter, feedback from the audience will be taken for improving and refining
the product (Jonsson and Lindbergh 2013). Instead of investing too much money and
time for creation of a product that I feel is perfect, it will be a wise decision to create a
product as per the requirement of the potential customer. The main advantage of this
funding is I will be able to work more efficiently for the final product and gain
customers those may assist in generating profit in initial stages (Albert et al. 2014).
 Crowd funding – this type of funding is divided into reward-based crowd funding and
equity crowd funding. Under equity option, the investors will invest their money for
my business and will get equity as return (Mollick 2014). On the other hand, under
reward-based option, people invest their money in my business and will receive
reward in return. The main advantage of this form of funding is that with the reward-
based option, I will have full control and under the equity-based option I can offer the
investor exactly the same that I will feel comfortable with. It will also assist me in
showcasing the fact that there is an active market for my proposal (Sahm et al. 2014).
However, the crowd funding is considerably time consuming and requires big
commitment for success.

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Reference
Albert, M., Bartlett, J., Johnston, R.N., Schacter, B. and Watson, P., 2014. Biobank
bootstrapping: is biobank sustainability possible through cost recovery?. Biopreservation and
biobanking, 12(6), pp.374-380.
Jonsson, S. and Lindbergh, J., 2013. The development of social capital and financing of
entrepreneurial firms: From financial bootstrapping to bank funding. Entrepreneurship
Theory and Practice, 37(4), pp.661-686.
Mollick, E., 2014. The dynamics of crowdfunding: An exploratory study. Journal of business
venturing, 29(1), pp.1-16.
Sahm, M., Belleflamme, P., Lambert, T. and Schwienbacher, A., 2014. Corrigendum to
“Crowdfunding: Tapping the right crowd”. Journal of Business Venturing, 29(5), pp.610-611.