Funding Your Business

www.covenantuniversity.edu.
ng
Raising a new Generation of Leaders
EDS 311
FUNDING YOUR BUSINESS
Introduction
The foundation of all
businesses is an IDEA.
The foremost building block
of all commerce is CAPITAL
(Olusanmi Olamide)
2
Introduction
The absence of funding can make you and
your idea miserable, depressed, unhappy,
unfulfilled, despondent, downcast, hopeless,
dejected, downhearted, pessimistic,
doubtful, negative, distrustful, cynical,
gloomy, suspicious, frustrated, and ultimately
a doomed destiny.
3
.
4
Introduction
A company without proper financing will
have a tough time competing with
competitors and market leaders.
Hence, the need for proper funding
cannot be ignored in the business
success equation.
5
.
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How do I fund my business
There are various options open to an
individual when it comes to funding his
or her business.
However, the caveat here is the capacity
of the business to sustain the demands of
such source.
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Sources of Funding
The following are various sources of funding
open to your business:
1. Personal savings
2. Friends & Family
3. Angel Investor
4. Associations (including religious groups)
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Sources of Funding
5. Obtain loan from Financial Institutions
6. Product or service launch
7. Venture capital fund
8. Franchise
9. Inheritance
10. Grants
11. Corporate & Individual sponsorship
12. Government incentives
13. Crowd funding
14 Partnership
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Sources of Funding
Personal Savings: This is money owned by the
business owner. The benefit of using your own
money to start up is that you are free from the
constraints and “shame” of borrowing.
Furthermore, the basic incentive for an investor
to invest huge sums into your business is
premised on your financial commitment to the
same.
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Sources of Funding
Friends & Family: This involves obtaining money
from your inner circle, nuclear & extended family. It is
a safe source of funding but could ruin your
relationship, if you default in repayment.
Angel Investor: This kind of funding involves an
individual or group that offer cash in exchange for a
share of the business. Sometimes they take an active
role in the venture and sometimes they act as silent
partners.
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Sources of Funding
Associations: No man is an island. Everyday we
involve our selves in activities that involves other
people. Thus, such interactions becomes an
association eg NUASA, NESA, NURTW, FECA, PFN,
Hospitality Unit, Cu Choir, Alumni etc.
Product or service launch: This is an organized
event used in market penetration. It is aimed at
promoting new products/ services.
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Sources of Funding
Loan from Financial Institutions: Approaching
a bank is also a good source of funding. However,
due to the requirements demanded by the banks,
this is usually very difficult to access.
Furthermore, the banks demand for high interest
from the borrower.
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Sources of Funding
Venture capital fund: These are funding
agencies interested in investing in viable
projects or businesses through acquiring certain
percentage of the companies equity in exchange
for cash and kind.
Franchise: This involves selling your business
model to other individuals or companies to
operate under your business identity.
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Sources of Funding
Grants: These are foundations and non governmental
organizations that seek to groom and fund up-coming
entrepreneurs. There are different types of business grants
available. The job of the entrepreneur is in convincing such
grant giving body that your idea is viable. If you or your
business qualifies, they can provide the financial impetus your
idea needs to either get off the ground or grow into something
bigger and better
Corporate & Individual sponsorship: This is a form of CSR by
big organizations. This is a situation where big corporations
provide start-up fund to indigenes in the area where they
operate.
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Sources of Funding
Government incentives: In order to facilitate
the growth and development of specific sectors
or industries, or to promote certain national
objectives government give tailor-made
incentives for such purposes. This is to
encourage the increase of entrepreneurs in such
sector(s). Eg. Agricultural engagements,
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Sources of Funding
Crowd funding – These are primarily web-based
projects and allow individuals with a business,
idea or project to reach out to thousands of
potential investors through various platforms.
Investments can be debt, equity or rewards-
based.
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Sources of Funding
Partnership: Taking on a partner can be a
source of funding. Instead of going solo (Sole
Proprietor), recruit partners and share the equity
of the business amongst your partners.
Strategically, you could have a funding partner, a
research partner, a partner with goodwill (Name/
important societal figure) etc
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www.covenantuniversity.edu.ng
Raising a new Generation of Leaders
EDS 311
IDENTIFYING THE RIGHT FUNDING FOR
YOUR BUSINESS
How do I identify the right source of funding
• The right source of funding for your business is
the one that helps you in achieving business
growth and minimizes the risk of winding up.
• Hence, the capacity of the business to sustain

the demands of any source of funding is critical
to the survival of such business.
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 Start-up growth
 Loss of business
• Based on the following criteria, we can try to

establish a balance on the right source of
funding for your startup.
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• We established a 2 by 2 matrix with the named
criteria.
1. High start-up growth; High loss of business are
termed Learned / Seasoned Investors
2. High start-up growth; Low loss of business are

termed Accelerated Learning Platforms
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3. Low start-up growth; High loss of business are
termed Predators
4. Low start-up growth; Low loss of business are

termed Cheer Leaders
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Start-up Business Growth
HIGH LOW
HIGH Learned/Seasoned Predators

Investors
Loss of Business
Accelerated
LOW Cheer Leaders
Learning Platforms
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CLASS ACTIVITY
• Based on your insight on the model, classify the
various sources of funding into the 2by2 matrix.
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Model Credit
• Model was developed by Olusanmi Olamide,
Accounting Department, Covenant University
for the purpose of teaching Entrepreneurial
Development Studies (EDS 311)
• This can further be critiqued and expanded on.
So that start-up’s can be properly advised on
the appropriate source of funding.
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Funding Your Business

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www.covenantuniversity.edu.

Raising a new Generation of Leaders

Raising a new Generation of Leaders

• Hence, the capacity of the business to sustain

• Based on the following criteria, we can try to

2. High start-up growth; Low loss of business are

4. Low start-up growth; Low loss of business are

HIGH Learned/Seasoned Predators

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