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Questions and Answers
Explain the challenges early-stage founders face when trying to finance their business.
Early-stage founders often lack the capital to finance their business and may have limited options for financing. Traditional lenders like banks require a strong track record or personal guarantees, pushing founders to dip into personal funds or seek support from family and friends. However, when more capital is needed, founders turn to equity financing from angel investors or venture capitalists.
What are some differences between angel investors and venture capitalists in terms of the stage of business they typically invest in?
Angel investors typically provide seed funding for early-stage businesses, while venture capitalists tend to invest in businesses that have already proved their business model.
What is the primary requirement for traditional lenders like banks when considering lending to early-stage founders?
Traditional lenders like banks typically require a strong track record or personal guarantees to offset their risk of lending.
When do founders usually resort to using personal funds or raising money from family and friends to finance their business?
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What type of professionals are venture capitalists, and what is their role in investing in startups?
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