Examining Capital Resources Essay

Deciding how to finance your business venture necessitates a lot of thought and planning before making critical decisions about the early phase for the business. During the early phase, business owners must put forth considerable attention towards multiple differing financing options with varying conditions that can have contractual arrangements. Therefore, entrepreneurs must review all of the financing options while learning about the conditions that must be met in order to obtain capital investment during the early stages of the business.

Deliverables: Minimum of 3 full pages required (exclusive of title and reference pages).

Activity Details:

Step 1: You are planning your financial strategy for your business. You are in the early stages and trying to determine the next phase of financing. Determine whether you should seek an angel or a venture capitalist.

Step 2: The Essay will also need to include and apply:

· Definition of an angel, when they invest, and what they look for

· Definition of a venture capitalist; and what is attractive to a venture capitalist.

· High-level overview of (1) Capital Resources, (2) Assessment of External Resources, and (3) Intellectual Property.

· Contrast Angel investment and financing and their preferences and compare with Venture Capitalists.

· What do angel investors provide and not provide, and also venture capitalists?

· Why is an investment more attractive for an angel but not a venture capitalist, and vice versa?

· What is attractive to both angels and venture capitalists?

Examining Resource Examination Questions

Financing is a critical determinant of the success and growth of a business. Nowadays there are diverse financing options that entrepreneurs can leverage on to build or grow a business. However the process of finance acquisition process requires in depth understanding of the contractual structure and arrangement. In this regard businesses should review and analyze the differing financing options available for the business to determine contractual terms and conditions.

During the early stages of my business venture, I will seek an angel investor. This financing option is ideal for a startup business. It offers numerous investment funds at reasonable and affordable terms that will help me achieve my goals and preserve the strategic vision of the business. Furthermore, an angel investor offers valuable advice that helps in the running and operations of the business. An angel investor is a person who has a very high net worth who lends money to start up a business in exchange for an equity stake. Angel funders invest in the early stages of a business. They chose businesses that align with their values and have the potential to grow even with a little track record (Blakely, 2018). Venture capitalist is a firm or person who invests in a company/business to exchange equity stake. Traditionally venture capitalist is attracted to established businesses with high-profit margins and demonstrates the potential to grow.  Venture capitalists require the business to have an already established mission, vision, values and expected outcomes. Initially before the capitalist firms channels funds to the business should establish a board of directors and appoint a member of venture firm as a board member.

In the contemporary business environment, capital resources refer to the items that an entrepreneur requires to produce goods and services. These items include machinery, tools, buildings, machinery, and any other goods and products injected into the business to facilitate production. Capital resources play a crucial role in the conversion of raw materials into a quality end product.  Capital resources are the driving engine of the economy as they contribute to the expansion and startup of new businesses in the market. Capital resources vary from one business to another, depending on the nature of the business.  (Jenkins Heather, 2020). Although businesses sources capital resources from  family, friends or relatives  entrepreneurs can decide to secure loans from an angel or a venture capitalist on contractual basis.

An external resource is necessary in the running and operation of a business.  An external resource is a resource that does not interact with all the business operations in an organization. It comprises accounts that store employees’ information and is not necessarily linked to goods and services. Examples of external sources include laptop computers, security badges, desktop computers, and cell phones.   Sourcing of external resources requires a series of manual processes. External resources are mainly approved and confirmed by the top executive management and eventually fulfilled by the junior level employees. For instance, when sourcing a laptop computer for a new employee, the procurement office must fill an initial request and get approval from the top management. After this, he/she should submit a purchase requisition request to the company’s order request system. Finally, the order is configured with the pertinent corporate applications before being handled over the new employee (Oracle, 2020).

Intellectual property is an intellectual asset that supports the innovation process from conception to commercialization of products and services that are beneficial to a person/company. Intellectual property is founded on a person/company’s ability to underpin the innovation process’s uncertainties and risks up to the final product. The comprehensive integration of innovative technology and commercial benefits is the foundation of intellectual property. With a good understanding of the commercial benefits, the entrepreneur will advance to marshal assets cooperatively towards the financing of an innovation’s goal especially in the early stages of the business (Mcmanus, 2019).

Angel funders invest in small businesses with their own money, while venture capitalists are source funds from large corporations. The angel funders are focused on building the business from the ground up, unlike the venture capitalists driven by higher returns on investment. As a result, angel investors comprise of affordable and favorable terms than venture capitalists. Although both Angel and venture capitalists take up a certain percentage of the business shares, venture capitalists want to govern their running and operation. On the other hand, Angel capitalists do not control the business but act as mentors. They offer advice to small businesses and introduce the leaders to influential people who can help guide the business in the right direction (Virgin Start Up, 2020).

Angel investors invest an average of $330,000. They provide valuable information that is pertinent to the growth of your business. However, venture capitalists inject an enormous amount of money into the business. The average amount that venture capitalists inject into the business is $11.7million. Venture capitalists bring new people into the business to manage and oversee an organization’s  (Virgin Start Up, 2020).

A business venture is more attractive to angel investment than a venture capitalist if it is a startup in the early stages of operations. Angel investors specialize in businesses that require minimal amounts of funds as they can only offer seed funding.  On the other hand, venture capitalists are interested in business starts that show a compelling promise and growth potential. Moreover, they are attracted to established businesses willing to receive the funding at every high-interest rates. Lastly, venture capitalists align their funding to businesses that comply with their terms and policies to form a board of directors and assign one member from their team (Virgin Start Up, 2020). Both venture and angel investors are attracted to businesses with a high track record of good performance or demonstrate the ability to comprehend the growth strategies required. Furthermore, the business should be conducive for growth and expansion (Virgin Start Up, 2020).

In summary every financing option is unique and structured to suit different businesses. Financiers offer diverse capital investment during various stages of the business lifecycle under different contractual arrangements. It is therefore of paramount importance for entrepreneurs to reviewing to identify the best fit financing option for the business.


Blakely, G. R. (2018). How to Decide Between Pitching to a Venture Capitalist vs. Angel Investor. Retrieved from Patriot Software: https://www.patriotsoftware.com/blog/accounting/venture-capitalist-vs-angel-investor/

Jenkins Heather. (, 2020). Understanding Capital Resources. Retrieved from Study: https://study.com/academy/lesson/capital-resources-lesson-for-kids.html

Mcmanus. (, 2019). Protecting Your Innovation. Retrieved from Northern Arizona University.

Oracle. (, 2020). What are External Resources? Retrieved from Oracle: https://docs.oracle.com/cd/E19225-01/821-0094/gigum/index.html

Virgin StartUp. (, 2020). The Difference between Angel Investment and Venture Capital. Retrieved from Virgin Start-Up: https://www.virginstartup.org/how-to/difference-between-angel-investment-and-venture-capital



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