Over the recent years, there has been an internet explosion and today most of the businesses are establishing an online presence to take up the opportunity and fill the demand gap. Buying and selling of goods and services through online platform today is a very popular activity not only in Singapore also to the rest of the world.
With so many available opportunities, many investors have emerged to offer financial support to the online business owners. Establishing a complete online business is costly since money is needed for web development, domain registration and hosting, marketing among other relevant activities. Discussed below are some of the ways in which business owners can source funding in Singapore.
Venture funding and angel investing
To avoid debt financing for a business, private investors come as the best alternative. They usually provide capital that is then exchanged for a percentage share in the business. It is always a good option for those owners who have insufficient collateral that can help them secure traditional loans. The benefit of such like source of funding is that business owners do not owe anyone money.
The drawbacks are that only businesses that have the potential of growing are the ones that attract the investors. As the business owner, demonstration of the business making a profit in the near future in necessary to the investors. The second one is that a percentage of the business in normally given away to the investors. It means that the business is not solely owned as before.
It is one of the most popular ways of raising funds for the e-merchants in Singapore. Through this debt financing, business owners are able to retain full ownership of their businesses as compared to equity financing where a certain portion is given to the investors in exchange for capital.
The drawback of this type of financial sourcing is that business owners do owe the financial institutions money thus indebted whether the business becomes a success or fails along the way. Getting financial institutions who are ready to offer the fund is also not easy unless a proof of profitability or success of the business is done. Alternatively, business loans can be sourced from friends, family or banks.
The Singapore government has placed many initiatives aimed at helping startups to have an easy access to funding. Business incubator schemes, government equity financing schemes and tax incentives are just but the few initiatives in place today.
Having knowledge about the sources of funding makes it possible to establish an online business. Raising capital has always been a major challenge for any business startup in Singapore.