Comparing Investment Banks to Other Fund Sources

It is important to consider the amount of money needed to open your business after estimating your expenses. At this point, you want to determine whether you will need to borrow a portion of it. If you believe you are rich enough to fully fund your business, you have a major hurdle cleared. If not, there are sources that can lend you based on certain factors and investment bank is one of them.

An investment bank is a financial institution that provides loan or at least helps raise financial capital to assist individuals, businesses and companies. This is usually done through underwriting or acting as the client’s agent while issuing securities.

Why choose investment banks

Most novice business owners may not be able to get a loan for opening costs. Conventional banks and certain credit unions are all conservative lenders and what they require beforehand is a proven track record of your borrowing habits. If your opening costs exceed your business resources, you will have to find other sources of money. But to raise money of that magnitude, you will probably need to demonstrate your willingness and ability to pay it back as well. Investment banks on the other hand will listen to your needs and make sure they are met appropriately.

Other sources of fund

There are many funding sources that you can count on. First and foremost is your own personal savings. Obviously, if you have the needed money, you don’t need to raise it elsewhere. But be careful not to drain out all your savings – including the ones that you need for medical emergency and retirement. Friends and family are another source to raise this fund. This source is the least expensive too because they may not charge you interest and they are usually the ones who will fall for your pleas. Another means of raising startup money is through partnerships. But always use caution when taking on a partner because you may need to give up something in return for the loan. This could be anything as simple as your vehicle to as complex as your business itself. Equity money is one more source of fund for your business. This money can come in many forms including private investments from friends and interested strangers. Those strangers may be someone with plenty of cash and ready to invest in a sound venture or other successful companies that wish to have some interest in your business. They may also bring expertise and experience to the table. Home equity is one of the biggest sources of capital as well. This will depend on how the fair market value of your property is in relation to the home mortgage. The only downside is that you are putting your home at risk in case you fail to pay.

About Kenneth C. Griffin

Kenneth Griffin is a hedge fund manager in the US. He is the founder and CEO of a company called Citadel which handles global investment projects. Citadel is one of the biggest investment management firms with over $25 billion in investment capital as of 2015.