Edexcel Business A Level Revision

Crowdfunding - raises finance by inviting lots of people to lend small sums of money via web sites listing businesses seeking loans. The business uses the internet to explain how much money is required, how it will be used and the exit strategy stating predicted return on the investment. The investor is only tied into their contribution if the total amount is raised. ADVANTAGES OF CROWDFUDNING Millions of potential funders can be reached all over the world. DISADVANTAGES OF CROWDFUNDING No guarantee that Crowdfunding will raise sufficient finance BEST FOR ...   Unusual ideas and projects that might not attract other forms of finance.

Business angels -   Usually high-net worth individuals who invest either directly or via network syndicates into start-up businesses in return for a share of the business i.e. percentage equity. Can be seen as high risk as the business is not established but angels will assess the potential for reward. The entrepreneur will need to demonstrate a good understanding of their business model and present a detailed business plan in order to secure the investment. BUSINESS ANGELS MAY ALSO OFFER SUPPORT AND EXPERTISE , ADVANTAGES OF BUSINESS ANGELS They are normally very knowledgeable and experienced in business matters; may act as a mentor for the business, providing advice and guidance. DISADVANTAGES OF BUSINESS ANGELS May require some form of equity (share) which gives them a measure of control. BEST FOR .... newer and possibly high risk, early stage or high growth business.

Banks - Financial institutions that are licenced to the deposits, pay interests,  make loans and act as an intermediary in financial transactions, as well as provide other financial services to their customers. Banks will have departments and employees who specialise in business banking including offering advice on topics such as methods of Finance and business planning. ADVANTAGES • Fixed sum available via loans • Easy to plan for fixed repayments DISADVANTAGES • Often difficult to persuade banks to lend • May not be flexible • Requires interest payments • May require collateral BEST FOR... Established businesses with a credit record.Overdrafts for short term cash flow problems.