the Crowdfunding:


### **2.4 Second stage of financing life cycle (early stage/growth stage)**

At this stage, the following options for financing are available [10]:

	- Joint venture
	- Mergers and acquisition

Seed money and venture capital differ in certain characteristics. Seed money involves high risk as the investors do not require a well-developed business project proposal like in venture capital funding or significantly vary in the sums of investment they provide to the beneficiaries, while in seed funding only a small sum of money is invested to the new businesses as against venture capital investment can invest heavily and as a result, the risks associated with funding the businesses are different.

• *Venture capital*: it is a convenient financing mode that is used in the early stage of startups to support the current business operations that have been believed to their future growth potential in exchange for equity. It is a risky decision for venture capitalists to invest the new businesses with the hope that they will succeed in the future. The difference between venture capital and loan investment is that one does not require collateral like real estate and liquid assets. Businesses prefer accessing venture capital when traditional financial institutions reject financing the companies due to the risks. Investment in new companies that do not qualify for the loan criteria involves high risks for the investors and venture capital funds, but the return is high. The sources can be pensioning funds, insurance funds, company assets, private savings, and investors and

public assets. Venture capital can be obtained at any stage of business development. The goal of the venture capitalist is to support the growth of the company with the investment and obtain a return through an initial public offering and trading. Moreover, the investors are most interested in businesses that have promising growth in a short period, subsequently, they necessitate the beneficiaries to have professionally developed business plans.

	- Leveraged buyouts: LBOs are backed by a private equity firm that funds the transaction with a significant amount of debt in the form of leveraged loans, mezzanine finance, high-yield bonds, and/or seller notes. Stronger markets usually allow for higher leverage.
	- Platform acquisitions: These are transactions in which private-equity-backed issuers buy a business having a deem that it will gradually lead to growth.
	- Strategic acquisitions: Strategic acquirers are usually corporations in the same or a related industry segment as the target company, allowing the buyer to leverage its expertise in the segment.
