As the saying goes, “a journey of a thousand miles begins with a single step”. This phrase holds true not only for personal journeys but for businesses as well. There is no single business that has not started from scratch and all businesses, both big and تأسيس شركة في دبي, can attest that the first 3-6 years of the business could be the hardest period in a business’ life cycle. During the first few years, start-up businesses start to build their reputation, muster potential customers and clients, create performance records and expand their networks to a greater extent. All of this requires proper marketing, product development and media exposure, which then requires ample funding and additional resources.
Emerging-growth companies are companies that have very high potential and can grow into a very strong business if nurtured properly. Usually, these are companies that introduce new ideas in the market and outplay established competitions by novelty and creativity in delivering their services. Companies that specialize in social media, science and technology, communications and other popular fields are considered emerging-growth if they offer new ideas and innovative solutions that are not yet fully explored in their business’ target niche. Investors usually search the market for emerging growth companies because they offer the possibility of high yields and profitable returns if guided properly in the right direction.
Funding can come from many different sources and they also come with different risks. For an emerging-growth company, funding is usually a problem and full-scale market production of the goods and services cannot be done without ample capital in hand. As a safety precaution, a company must have a funding of twice as much its start-up capital in order to avoid undercapitalization. This basically means that if a business needs $100,000 to start, that business must have at least $200,000 in hand as a safeguard for the next 12-24 months of operation.
The problem is, some companies don’t have enough money to cover all its operational and developmental expenses especially if it is a start-up company with private funding. To solve this problem, companies look for funds in the form of shareholding, venture capital, seed money and other different ways. Each of these fund-raising options has its own pros and cons and careful deliberation should be made whenever a company enters into an agreement with the inventors that offer these funds.
This kind of financial funding refers to the aid given by an venture investor to start-up businesses that have very high potential for growth but are too small or too inexperienced to successfully obtain bank loans. A venture investor is an investor that manages the pooled money of other people in a collective fund to be used for funding purposes. Under this funding system, an investor agrees to fund an emerging-growth business with a large amount of money in exchange for an ample amount of control over the company’s business plans and decisions. The venture capital and the owner jointly run the company and both parties profit from the gains and suffer from the losses during the course of the agreed partnership. The advantage in this kind of capital is quite obvious; an owner gets a large amount of money to spend for the company’s operational, research and expansion programs without the need to borrow from a bank. However, the owner gives up full independency and allows the venture capitalist to control and manage a significant part of the business operations. Corporate Venturing
An alternative to the traditional venture capital, this kind of funding results to an alliance between a larger, more established business and a start-up company that is too small for a full take-off. Typically, the larger company directly invests its resources and capital to the smaller company. These companies usually work on a related business field where their venture is centered and both companies share the risks and rewards that may possibly arise during the course of the scheme. The advantage in this venture is the access given by the larger company to its resources and distribution channels. The smaller company is treated like a smaller “brother” and is given ample support to fully realize its market potential.