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Finance for Non-Financial Managers
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Entrepreneur A busi-
started and get their first
nessperson who starts a
products to market. Many
company with the intention investors in order to get
from the beginning of growing it to be others needed outside
much larger than would be necessary investors to expand their
to simply provide an income to the companies.
owner and (typically) selling it at There are many
some point—to the public through a sources for investment
stock offering or to another compa-
ny—for a substantial profit. capital potentially available
to the promising or proven
entrepreneur. Sometimes
the money comes from the founder’s own pocket at first, from
savings or borrowing against the house or raiding the kids’ col-
lege fund. But often the money comes from others who have
heard about the entrepreneur’s dream and want to be a part of it.
This chapter is an overview of the sources of investment
capital for the entrepreneur, from the first dollar invested to the
last dollar before the entrepreneur sells what he or she has built.
The discussion follows generally the order in which the entre-
preneur will tap those sources of capital, from the first to the
last. Keep in mind that a particular company may not need all
these stages in order to reach profitability and cash self-suffi-
ciency, and some will need them all, depending on the com-
plexity of the enterprise and the difficulty in establishing a suc-
cessful market position.
So, when an entrepreneur wants to start a company and
needs more money than he or she has in the bank, these are
the places to go knocking with that exciting business plan in
hand. These are the investors.

The Start-up Company: Seed Money and Its Sources
Regardless of how difficult it is to do, the entrepreneur starting
a company from scratch must almost always put up the initial
money from his or her own resources. This is so for several
reasons: