Sources of Capital

A hospital wants to open a maternity ward. They have the space, but don’t exactly have the needed funds, so they talk to their supplier. The supplier promises to fit out the maternity ward with equipment, in return for a monthly fee, in stead of the purchase price.

This is an example of:

• Venture Capital

• Leasing

• Buisness Angel

• Loan Capital

Vanderzandt Ltd., by decree of the board, gives employees the option of buying in to the company, by the special issue of a class of stock specifically for this purpose.

This is an example of:

• Venture Capital

• Loan Capital

• Sale of Assets

• Share Capital

Juan’s construction firm has some issues with people who haven’t paid their bills. He has more than $ 40.000 outstanding, and he has issues paying for the materials he needs to keep the company going.

He talks to Shark International, a firm from Hong Kong, and manages to offload the bills to them in return for $ 25.000 cash, and now Shark International will chase these people for the money owed.

It will remove a lot of the profit Juan made originally, but at least he is rid of these unpaid bills and can buy materials again to make new profits, so Juan is actually very happy.

This is an example of:

• Overdrafts

• Loan Capital

• Sale of Assets

• Debt Factoring

The Board of Ching Shu, a debt collection firm, decides to postpone the payout of shareholder dividends to finance company expansion. The funds are used to open new offices, increasing their circle of activity. The shareholders think this is a great move as they think this will increase their stock value over time.

This is an example of:

• Grants

• Share Capital

• Retained Profits

• Venture Capital

MegaBurger talks to the bank, to finance the opening of 2 new MegaBurger locations in Abu Dhabi. The bank, after deliberating if this a good move, offers MegaBurger 4 million AED at 5% interest.

This is an example of:

• Debt Factoring

• Business Angel

• Personal Funds

• Loan Capital

Atomic research firm ‘GammaTech’ thinks they figured out fusion power. Setting up a test lab won’t be cheap, though. They petition the government, because they know there is some national budget for this kind of research. The government agrees and sends them $ 2M, without any expectation to get it back.

This is an example of:

• Grants

• Business Angel

• Venture Capital

• Loan Capital

On a flight from Miami to Tokyo, Watanabe Ushihara meets an engineer who poured every cent he had into a new process that uses specially treated gold particles to turn carbon dioxide, into oxygen gas and powdered carbon. The engineer is financially at a dead end though, and nobody wants to invest in his idea. In fact, he is now on his way to sell his late uncle’s apartment in Osaka just to make ends meet.

Mr. Ushihara however, is an extremely wealthy man, and tells the man not to sell the house, but to meet him the next day in a restaurant in Tokyo, where he offers the engineer a partnership so he can continue his research without worrying over money.

This is an example of:

• Grant

• Business Angel

• Loan Capital

• Debt Factoring

The owner of Jack’s Furniture Workshop, a one man company, manages to get a massive order to fit out a secondary school in Michigan. He puts $10.000 of his savings into the company so he can buy the needed raw materials, fully expecting to earn it back quickly.

This is an example of:

• Subsidies

• Trade Credit

• Personal Funds

• Share Capital

The ‘Healthy Heart’ Fruit company wants to expand into juices. They need to buy a juicer. They ask their fruit supplier to agree with them paying their bills after three months, in stead of the normal 30 days.

The supplier, knowing that this juicer will probably mean they will sell more fruits to ‘Healthy Heart’, agrees.

This is an example of:

• Leasing

• Personal Funds

• Retained Profits

• Trade Credit

BioLife Inc. found a new way to create fuel that resembles diesel oil in every way. It uses a combination of organic waste from farming processes, water and enzymes. However, the price of the biofuel is higher than actual diesel. The government, however, feels it is in line with their green goals to produce this fuel, so they promise to pay BioLife enough per liter produced to make the price competitive with normal diesel.

This is an example of:

• Grants

• Subsidies

• Retained Profit

• Leasing