Capital Funding

If you're a company wanting to create something spectacular, then you need "things" (assets) to support that product creation: buildings, machinery, land, equipment, materials, supplies and everything else that goes into supporting your business. In other words, you need capital.

But how do you get this capital? Simple businesses don't need a lot of capital funding. A good ‘ole fashioned car wash in your parking lot just needs some soap, a source of water and some rags. But in terms of a fast track to the Billionaire List, that won't get you very far.

On the level of business development that gets reported by the Wall Street Journal, you'll require larger scale methods of raising funds. These include things like equity or bond issuance (selling stock in the company or borrowing money from investors).

Here's an example:

Let's say you're hanging out with your buddies one night and after downing a few stiff drinks and complaining about the drudgery of completing TPS reports. After downing a few, you begin making plans to stick it to the man, and better yet, start your own profitable business. You think, heck everyone else is using the Internet to make money, why can't I? And after a few more rounds of gin and juice you convince your friends that the business degree you earned 20 years ago makes you an expert in this kinda stuff, and so you all take the Nestea plunge.

But you realize you have no funding to buy things like equipment, supplies, land, office space, or even staplers (you know, no capital) to get your new flair company up and running. So, after writing a stellar business plan, you go down to the local bank to get a loan, but are promptly denied because your business is too "risky" (what do they know about e-commerce anyway?). You and your partners promptly agree that you need to find some way to have someone fund your venture.

You remember that your brother's wife's sister's co-worker knows some rich millennials with deep pockets (venture capitalists or angel investors). And they agree to throw some money your way. (Apparently they like flair too). Thankfully, with your newfound equity AND after successfully issuing some capital bonds AND rolling out an IPO, you've finally raised enough capital to buy you and your buddies new Maseratis to support your business travel needs in Europe. Wait. Wasn't this supposed to be an e-commerce business?