Your friend is starting a video game company and has asked for your help in putting together a business plan. She is especially concerned with sources of nancing and whether she should use debt or equity nancing. She has asked for your recommendations. Source When and hOW t0 use Comments Bootstrapping The company is started with personal Maintains full ownership and finances, borrowed or donated control equipment, and using only the finances - Difficult to source certain generated through revenue items - Lack of financing can cripple the business Family and Might be the most viable source if the - May be willing to accept low friends business model is untested or the (or zero] interest rates venture is brand new or unique . Terms must be clearly spelled out to avoid conflict and disappointment Banks Can provide operating lines of credit to Lack of credit history can be a help with cash flow major impediment Leasing equipment might be a Term loans can help with fixed assets better way and equipment Venture Provide seed money in exchange for Are less risk averse capitalists equity in the company Can expect large returns in short periods Angel Provide personal funds for the business Often more interested in investors to be repaid or for equity in the business medium-sized ventures; harder to get for small businesses May provide mentorship other Government grants; financial Time consuming cooperatives Small amounts available typically