Topic: Would you prefer getting a loan for a startup or getting an investor? - page 5. (Read 839 times)

It all depends what percentage of your control, you are willing to relinquish. The loan from a Bank will not give them any say in your day-to-day operations, because they are only interrested in the loan repayment at the end of the month.

When you get investors to invest money into your business, they want a share in the day-to-day operations and if they have a controlling percentage of the "shares" they can execute a hostile takeover of your business, when you become succesful or they can sabotage your decisions with their own agendas.

That is definitely the problem with amateur trying to find investors who truly want their project succeed and willing to spend some money into cultivating the project into some extent, when we are talking about money we talking about trust, we all know newbie with no experience of building startup and successfully carrying it into multi millions value always getting ignored, moreover if we trying to find some big investors that willing to spend big money with a lot of uncertainty to cultivate our startup it becomes even more difficult, lets be frank here reputation and alma mater matters a lot in giving that good first impression into people, even more obvious when we trying to find a deal about investment to our startups, they will first judge based on our academic background, if we graduated from ivy league, it instantly gives good impression at the first meeting.
after that they will judge based on our achievement, if we have zero experience quite literally with the startup building, they probably gonna refuse to spend some money investing in our startup.

its always good to start out business from scratch even with loan first, don't set the bar too high, a thriving business that make profit is already good enough, it can work as a portfolio in our end and can elevate the value and self worth in the eyes of other.
what people seem to forget though, investors does manage their risk, they will avoid funding startup if they see no potential, they will judge the product as well based on their experience and sees whether it is fitting to be funded.
but what matter most is whether the business making profit, it reminds me of people that invest in meme coin heavily, they don't care about the idea, they just care to grow their capital and thats it.

When we are deciding on a contract, do not become too overconfident and start listing too important things as your collateral because you are not afraid to lose them. All businesses go through rough times and no matter how good your idea is, it will most likely fall victim to different kinds of challenges too

Different people will have different perspectives regarding this based on their understanding and thought processes. I would say it depends on how confident you are about your business idea. If you think that your business idea is great and the chances of it succeeding are way higher than it failing then I would say it is better to take a loan and fund your business with it because even though you might need to pay some interest, you will at least be the only owner of the business when it is all setup and running very well.

When you get an investor for your business on the agreement that they will get a certain percentage of share in the business, it can be a costly deal because once the business starts growing, you will have to give a larger percentage to the partner than you might have to give back as the repayment for the loan.

No matter which method or path you would really be taking on which its never been easy.

1. Getting investors?
How you would be doing it?
Where you would be finding?
Experience or inexperienced?

2. Taking a loan?
It would be feasible?
You could be able to reach ROI in time?
It would be sustainable?

These would really be the questions that you would really be able to encounter at the moment that you would
be tending to deal up with both things. Decisions be made will really be just that entirely be depending on how will you would
be able to handle up the risks in both possible options. Getting loan or trying to seek on investors?

Building up a business without some fund for start up would be a huge challenge whether you are lacking or just that too short on budget.
Then you could really be having those kind of options.

If we talk about desires, rather than taking out a loan from a bank or anywhere where the interest is relatively high, of course I would prefer to collaborate with investors. However, the problem is, which investors are willing to work with beginners who still have minimal understanding and experience to enter the business world. Will they trust me enough to provide me with capital..?

For a beginner who has just entered the business world, it seems that looking for investors is not an easy thing, in contrast to those who have been in the business world for a long time, who have tasted the sweet and bitter tastes of the business world, whose understanding and experience are quite mature. Maybe it is not too difficult for them to get investors, because the prospects regarding the promised profits are clearer compared to investing in beginners.

Why I would preferred an investor to join me to invest in my business is that an investor is ready to invest any amount of money just to make sure that the business becomes successful. Business like this their won't be  fears if the business won't do well but doing business alone and taking a loan from the bank, you may not want to take big amount just because you just want it easy to be able to pay back the loan and this amount of loan taken may not even be enough for the business.  When their is no good money at hand to put to invest in business,  the business struggles to grow.

But when you have investors around you to invest in your business,  money won't be a problem for the growth of the business. Many failed businesses is as a result of no good money. Sometimes taking loan to begin a business may not give you just what you want. The most important thing in business is for the business to stand. Partnerships is a good strategy to start a business that will stand.

When it comes to a startup, it's important to understand that no matter how passionate you personally feel about the project, there's a good chance it will fail to deliver what's expected from it. That makes taking a loan incredibly risky, as there's no guarantee you'll be able to return that money. As for investors, I think it's not a bad idea per se, as long as it's articulated in the contract that you cannot guarantee profit or even return of the invested money. Investment happens at the personal risk of investors. Ideally, I'd be looking for a third option, such as saving up money to give it a shot, or looking for a grant to kick-start the project. When you get a grant, you do usually need to report the results back, but you don't need to return money to anyone. Grantors are not going to profit from the result in any way, so there are no direct expectations in that regard.

Loans, sure, they can be a bitch. Interest rates and conditions might be burdensome. But think of it like this: you're not simply taking out a loan, you're purchasing time. You have time to construct your product, prove your idea, and gain traction. If you play your cards well, you may use that loan to strengthen your position when talking to investors. You have a better story, greater leverage, and less equity to give up

Investors are different. These guys want the next big thing, not just a return on investment. They want to be part of something big that will affect the world. They want a big piece of the pie, too. You must choose partners wisely. You need investors who share your vision, have a track record, and can contribute more than money. Advice, skills, and connections are valuable

In general, things like that really depend on the intentions of the person who owns the business because that person really intends to develop the business bigger. Of course he will look for ways to do this in order to develop it according to the tastes he wants and from the options you said, I think the option of looking for business partners and investors is a little more suitable than directly taking out a loan which might be felt by the business owner himself. Although logically taking a loan is not wrong, remember the aim is to make the business grow more.

First we need to be entrepreneurly wise in such decision making, so let us think an aspect between both of the options that has the potentials of attracting productiveness to the firm and also consider the interests rate of returns amongst them also the T&C to be applied so that we can meet them up as much as we can to stay debt free.

So I personally would go by letting an investor in because the investor would stand as a stakeholder to the firm and by so doing, he would as well play some flexible tasks by which his awareness could play to spread the existence of the firm.

Anyhow, the Investor could also facilitate for the contract to get done and focus more on other sections that my maybe productive to him.
However, investor may have some level of understanding when you could not comply to pay in an agreed time due to the fact that he also understand the conditions of investment and trading while loaning institutions don't care whether your venture is doing well or not. All they expected is to abide to the agreement.

I summary, loaning institutions are too strict and T&C abiding while investors can at sometimes slightly adjust with level of understanding.

Some loan companies would prefer to even fund the start-up themselves and share the profit until the loan borrowed is settled before allowing the startup owner breathe fully and compared against an investor or an angel investor, I would prefer to have an investor invest, in this way, I am not under pressure to deliver returns nor will I over stress myself thinking about how to pay back, because the amount to be paid back will be in smaller fractions or should I say it would be like dividend from investment in stocks and if the investor cares so much about the success of the business, I would have had an advisor already without needing to pay for one or seek advice from friends.

This varies on that thought for my business idea. If I think that it is going to click and I am willing to give time and effort for it, I might sell some of my stuff just to fund its few months of experiment and operation.

And if it doesn't work, that's fine. No loans, no heartbreaks but lessons will be there.

I like to do it first on my own.

If I think that I can't take it anymore then that's the time that I'll have someone to back me up and help me with it.

You are very correct, for me there are reasons why I wouldnt want to approach a loan facility for a startup investment although it will all depend on their terms and conditions if I will be able to meet up, no matter how it is, collateral remains collateral and as a new investment one needs to be careful because once there is any form of default in the terms given to you by either the loaning bank or microfinance firms just have it in your mind that your collateral is gone, so the best way to start is to convince investors to invest so that profit can shared accordingly, it is not a good idea to risk many things at the same time, risk should be checked and minimized in other to avoid regret, every company started small so we shouldn't be tempted to make a wrong decision or step that may lead us into debt or losing the only valuable thing we own.

It's true, in this case it really depends on the person running the business, if they need capital and know very well that the business they are building will be able to run well of course they can take out a loan and must be able to pay off their loan.
If we ourselves are still worried about the business we are running then it is very unlikely that other people will be able to partner or invest their capital in the business we are going to run.

I have to agree with you. Not all investors would easily trust your business idea that it’ll work and create profits. And if ever they will, they won’t treat you as a business partner but act as if they solely own the idea since it’s actually their own money that they’re going to risk. The reason why those with brilliant ideas never come into realization.

However, if I’m actually in this position being highly confident with my business idea that it will surely prosper, then if taking a loan would be disapproved, then maybe I have to try borrowing funds  from my family and friends and pay them with my monthly salary with interest. That way, I can move my brilliant idea into the next level, hoping that it would result into fruition.

Not only you, but I see that many people also do not intend to borrow money to implement their ideas and that means we are not confident and certain about our ideas. We are afraid of failure and getting stuck if our ideas fail, but with that in mind, can we find investors who are open and willing to invest in our idea? As you said, the rich will not be so naive as not to make any commitments to us, while we are still not sure about our ideas. Therefore, implementing a business idea based on the investment of others is not feasible.

Personally, if I have a unique idea, I will risk borrowing money and doing it myself instead of having to rely on others. I find relying on other people's investment capital to be much riskier because no one is stupid to invest in us without any conditions.

Freedom matters a lot for a responsible person. when I choose to go for a bank loan, I have the full support and control over it. I'm aware of the huge risks that are involve in going for a bank loan, if going for a loan will be more accessible and you have good ideas of what you are about to do with it, better take it and have the control and freedom.
If you are afraid of risk taking, those who take it will hire you to work for them.
So if I have technical ethics and business ethics, i will rather go for a loan.
But if you are afraid of taking risk and that is what will stop you from going for loan, then ask your investors if he or she has ever taking risk, that is loan? the answer will be capital Yes!! if that should be the case, then why can't you do same?
The entire life is all about ups and downs but when you don't quit, their is a very great potential that there is a light beyond the tunnel.

But I think convincing someone to believe in your idea and be willing to invest in you is extremely difficult compared to borrowing money and implementing that idea yourself. If you think you can leverage their expertise and relationships to make your business a reality, you need to pitch them an idea that is unique enough and commensurate with what they bring to you. Otherwise, no stupid investor will invest money in you and give you everything they have while you don't have anything special that they need. Not to mention, in case you have to depend on them for capital and you also depend on them for expertise and relationships, the profits you earn will certainly not be significant.

Hard to risk something using a money that we loan that's why for me this is not advisable to do especially if we are just starting up since we might fall down with that knowing that we need to pay our loaned amount on the agreed timeline with huge interest with it. That's why its good to have a open minded investor which is open up on everything and know the risk of what he's trying to enter. But also if the investor is greedy and doesn't know about there's a chance that you might fail then maybe you will get an issue with them. That's they make sure to have clear written agreement on the contract and be transparent of everything so that the investor would know about certain possibilities that they might face. But for sure they will not go on risky idea so we should offer something unique and useful so that we can catch their attention and success rate will go high so that we will be happy and the investor could gain something in return.