Opportunities for Getting Funds for Innovations

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Table of Contents

Introduction
Venture Capital
Business Angels
Crowdfunding
The Global Innovation Fund
Conclusion
References

Introduction

One of the major challenges that young innovators and firms face is the lack of financial resources to implement ground-breaking ideas. There are many opportunities for sourcing funds for innovation that businesses and inventors can leverage. They only require understanding how to reach them and present their proposals. Some external sources of financing include venture capital and business angels. Moreover, numerous foundations offer support to innovators whose ideas may help to improve social life or boost the economy of developing nations. This paper will discuss some of the opportunities that innovators can exploit to guarantee the actualization of their ideas.

Venture Capital

Venture capital refers to a form of financing, which investors offer to start-up firms and enterprises that have the potential for high returns. According to Bruton, Khavul, Siegel, and Wright (2015), venture capitalists scout for innovative ideas and offer to support those dreams in exchange for partial ownership. Young businesses and pioneering ideas face insecurity; therefore, venture capitalists have devised ways to appraise them before committing their resources. One of the advantages of this source of funding is that innovators do not only profit from financial support but also expertise and mentorship (Bellavitis, Filatotchev, Kamuriwo, & Vanacker, 2017). Nevertheless, venture capital deprives inventors of the power to make independent decisions on matters that affect their innovations.

Business Angels

Today, many investors offer expertise and financial support to young businesses to facilitate their growth. Bruton et al. (2015) define business angels as “wealthy individual investors, typically with business experience, who act as a source of equity and provide start-up capital to small firms in exchange for convertible debt or equity” (p. 12). These investors have created groups, which are helpful in connecting innovators with potential investors. They identify businesses or ideas that could be profitable but lack crucial resources for their implementation. The primary advantage of this mode of funding is that young innovators benefit from mentorship and networks. However, they are denied full control of their ideas or businesses.

Crowdfunding

Crowdfunding is a new mode of resource mobilization that people can use to solicit investment and grants to fund new ventures or innovative ideas. This means of sourcing for financial support entails using social networks and online avenues to sell one’s ideas to interested audiences. Some of the renowned platforms that support crowdfunding include Indiegogo and Kickstarter. Individuals who give their money receive rewards as a token of appreciation. Bruton et al. (2015) maintain that crowdfunding gives social innovators a chance to interact with citizens.

The Global Innovation Fund

The Global Innovation Fund is meant to assist innovators to develop ingenious solutions to social challenges that affect developing countries. This mode of financing holds that anybody can invent an idea that might be helpful in addressing social challenges, therefore it is not selective. Bellavitis et al. (2017) allege that the Global Innovation Fund offers grants, loans, and equity investment to all innovators regardless of their point of investing. This type of grant targets innovators with solutions to problems that affect poor communities.

Conclusion

Young innovators have an opportunity to seek financial support from investors and different foundations. Today, venture capital and business angels serve as major sources of funds for inventors. Nevertheless, these modes of financial assistance deprive innovators of the right to implement their ideas independently. Technological advancement has made it easy for people to use crowdfunding to persuade the public to back their projects. The Global Innovation Fund may be helpful in financing innovations that are intended to benefit developing countries.

References

Bellavitis, C., Filatotchev, I., Kamuriwo, D. S., & Vanacker, T. (2017). Entrepreneurial finance: New frontiers of research and practice. An International Journal of Entrepreneurial Finance, 19(1), 1-16.

Bruton, G., Khavul, S., Siegel, D., & Wright, M. (2015). New financial alternatives in seeding entrepreneurship: Microfinance, crowdfunding, and peer-to-peer innovations. Entrepreneurship Theory and Practice, 39(1), 9-26.

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