ABSTRACT
African entrepreneurs use different mechanisms to acquire startup capital. Common funding sources are self-funding, debt financing including taking loans from family members and friends, and equity financing. The venture could miss potential growth opportunities due to financial constraints and its very survival could be threatened. Family members who advance loans or agree to buy equity interest in untested new ventures obviously risk potential loss of their money if the business fails. Very few entrepreneurs have adequate savings of their own to start new ventures and very few have wealthy family members and friends who can provide them the startup capital they need. The decision to sell equity by the founders of the venture must carefully weigh the benefits of getting capital infusion from potential investors against the potential dilution of the owner's share in the company. Angel investors invest in startups and early stage ventures.
