Intellectual Property Rights (IPR) are the rights given to persons over the creations of their minds.

They usually give the creator an exclusive right over the use of his/her creation for a certain period of time. Intellectual Property Code of the Philippines Republic Act No. 829 AN A&T 'R()&R*+*N, !une "# $99% T-( *NT(..(&T/A. 'R0'(RT1 &02( AN2

()TA+.*)-*N, T-( *NT(..(&T/A. 'R0'(RT1 033*&(# 'R04*2*N, 30R *T) '05(R) AN2 3/N&T*0N)# AN2 30R 0T-(R '/R'0)(). &ommon types of intellectual property rights include patents# copyright# industrial desig rights# trademar6s# and in some 7urisdictions trade secrets. Patent 8 A patent grants an inventor exclusive rights to ma6e# use# sell# and import an invention for a limited period of time# in exchange for the public disclosure of the invention. An invention is a solution to a specific technological problem# 9hich may be a product or a process. Copyright 8 A copyright gives the creator of an original 9or6 exclusive rights to it# usually for a limited time. &opyright may apply to a 9ide range of creative# intellectual# or artistic forms# or :9or6s:. &opyright does not cover ideas and information themselves# only the form or manner in 9hich they are expressed. Trademark 8 A trademar6 is identifies products or services of a a recogni;able sign# design or expression 9hich

particular source from those of others. A symbol# logo# 9ord# sound# color# design# or other device that is used to identify a business or a product in commerce. *t has a longer life than a patent. *t grants business exclusive rights to a trademar6 for as long at it is actively using it. Registered trademar6 *ntent to use application filed for product

SM

*ntent to use application filed for services

Trademark Infringement Counterfeiting and !ilution is the Infringement 8 A mar6 that is li6ely to cause confusion 9ith a trademar6 already existing in the mar6etplace# Counterfeiting 8 The deliberate copying of a mar6.# !ilution 8 The value of the mar6 is substantially reduced through competition or through the li6elihood of confusion from another mar6 Trade Secret " A trade or secret is compilation

a formula# practice# process# design# instrument# pattern#

of information 9hich is not generally 6no9n or reasonably ascertainable# by 9hich a business can obtain an economic advantage over competitors or customers. Intellectual Property (IP) refers to the creations of the mind such as inventions# literary and artistic 9or6s# and symbols# names# images# and designs used in commerce. Also *' is a legal concept 9hich refers to creations of the mind for 9hich exclusive rights are recogni;ed. /nder intellectual property la9# o9ners are granted certain exclusive rights to a variety of intangible assets# such as musical# literary# and artistic 9or6s< discoveries and inventions< and 9ords# phrases# symbols# and designs. &ommon types of intellectual property rights include copyright# trademar6s# patents# industrial design rights# trade dress# and in some 7urisdictions trade secrets. *ntellectual 'roperty is divided into categories= $. 'atent 2. Trademar6 . &opyright P#T$%T is an exclusive right granted for an in&ention# 9hich is a product or a process that provides# in general# a ne9 9ay of doing something# or offers a ne9

technical solution to a problem. *n order to be patentable# the invention must fulfill certain conditions. A patent has a term of protection of t9enty years providing an inventor significant commercial gain. *n return# the patent o9ner must share the full description of the invention. Trademark is a toll used that differentiates goods and services from each other. A trademar6 can be one 9ord# a group of 9ords# sign# symbol# logo# or a combination of any of these. Trademar6 is a very effective tool that ma6es the public remember the >uality of goods and services. 0nce a trademar6 becomes 6no9n# the public 9ill 6eep patroni;ing the products and services. Copyright is the right that creators have to stop others from copying their creative 9or6s 9ithout their permission. Also# Copyright is a legal concept# enacted by most governments# giving the creator of an original 9or6 exclusive rights to it# usually for a limited time. ,enerally# it is :the right to copy:# but also gives the copyright holder the right to be credited for the 9or6# to determine 9ho may adapt the 9or6 to other forms# 9ho may perform the 9or6# 9ho may financially benefit from it# and other related rights. *t is a form of intellectual property ?li6e the patent# the trademar6# and the trade secret@ applicable to any expressible form of an idea or information that is substantive and discrete. 'o( does it (ork) &opyright protects the 9or6 of creators# such as artists# 9riters# musicians# and filmma6ers. 5or6s are protected as soon as they are created# as long as they have been 9ritten do9n# filmed or recorded. &opyright is automatic. 1ou donAt have to put a copyright notice on 9or6s# but it is a good idea.

1ou 9ill often see 9or6s 9ith the copyright symbol (*) and the copyright o9nerAs name on them. &opyright o9nership is different to physical o9nership of something. 3or example# if you buy a 242 of a film# you o9n the 242# but you donAt o9n the right to copy it. The film producer o9ns copyright in it and you need to have their permission if you 9ant to copy it. +hy is copyright important) &opyright is important because it gives creators control over their creative 9or6s. This means they can decide 9ho uses their 9or6# ho9 it can be used and if they 9ill charge a fee to other people 9ho 9ant to use it. This gives creators the ability to earn a living from their 9or6s.

Patent Retrieved from http,--en.(ikipedia.org-(iki-Patent # 2ecember 2BB% 3rom 5i6ipedia# the free encyclopedia A patent is a set of exclusive rights granted by a state to an inventor or his assignee for a fixed period of time in exchange for a disclosure of an invention. 8 an exclusive right officially granted by a government to an inventor to ma6e or sell an invention

The procedure for granting patents# the re>uirements placed on the patentee and the extent of the exclusive rights vary 9idely bet9een countries according to national la9s and international agreements. Typically# ho9ever# a patent application must include one or more claims defining the invention 9hich must be ne9# inventive# and useful or

industrially applicable. The exclusive right granted to a patentee in most countries is the right to prevent or exclude others from ma6ing# using# selling# offering to sell or importing the invention. !efinition The term :patent: usually refers to a right granted to anyone 9ho invents or discovers any ne9 and useful process# machine# article of manufacture# or composition of matter# or any ne9 and useful improvement thereof. The additional >ualification :utility patents: is used in countries such as the /nited )tates to distinguish them from other types of patents but should not be confused 9ith utility models granted by other countries. (xamples of particular species of patents for inventions include biological patents# business method patents# chemical patents and soft9are patents. )ome other types of intellectual property rights are referred to as :patents: in some 7urisdictions= industrial design rights are called :design patents: in some 7urisdictions ?they protect the visual design of ob7ects that are not purely utilitarian@# plant breedersC rights are sometimes called :plant patents:# and utility models or Gebrauchsmuster are sometimes called :petty patents: or :innovation patentsC. This article relates primarily to the patent for an invention# although so8called petty patents and utility models may also be granted for inventions. &ertain grants made by the monarch in pursuance of the royal prerogative 9ere sometimes called :letters patent:# 9hich 9as a government notice to the public of a grant of an exclusive right to o9nership and possession. These 9ere often grants of a patent8li6e monopoly and predate the modern +ritish origins of the patent system. 3or other uses of the term :patent: see .and patent 9hich 9ere land grants by early state governments in the /)A. This reflects the original meaning of :letters patent: that had a broader scope than current usage. /a( $ffects A patent is not a right to practice or use the invention. D$E Rather# a patent provides the right to exclude others D$E from ma6ing# using# selling# offering for sale# or importing the patented invention for the term of the patent# usually 2B years from the filing date. A

patent is# in effect# a limited property right that the government offers to inventors in exchange for their agreement to share the details of their inventions 9ith the public. .i6e any other property right# it may be sold# licensed# mortgaged# assigned or transferred# given a9ay# or simply abandoned. The rights conveyed by a patent vary country8by8country. 3or example# in the /nited )tates# a patent covers research# except :purely philosophical: in>uiry. A /.). patent is infringed by any :ma6ing: of the invention# even a ma6ing that goes to9ard development of a ne9 invention F 9hich may itself become sub7ect of a patent. *n contrast# Australian la9 permits others to build on top of a patented invention# by carving out exceptions from infringement for those 9ho conduct research ?e.g. for academic purposes@ on the invention.D2E A patent being an exclusionary right does not# ho9ever# necessarily give the o9ner of the patent the right to exploit the patent. D$E 3or example# many inventions are improvements of prior inventions 9hich may still be covered by someone elseCs patent. D$E *f an inventor ta6es an existing patented mouse trap design# adds a ne9 feature to ma6e an improved mouse trap# and obtains a patent on the improvement# he or she can only legally build his or her improved mouse trap 9ith permission from the patent holder of the original mouse trap# assuming the original patent is still in force. 0n the other hand# the o9ner of the improved mouse trap can exclude the original patent o9ner from using the improvement. )ome countries have :9or6ing provisions: 9hich re>uire that the invention be exploited in the 7urisdiction it covers. &onse>uences of not 9or6ing an invention vary from one country to another# ranging from revocation of the patent rights to the a9arding of a compulsory license a9arded by the courts to a party 9ishing to exploit a patented invention. The patentee has the opportunity to challenge the revocation or license# but is usually re>uired to provide evidence that the reasonable re>uirements of the public have been met by the 9or6ing of invention. $nforcement

The plate of the Gartin e7ector seat of the military aircraft# stating that the design is covered by multiple patents in +ritain# )outh Africa# &anada and :others:. 2Hbendorf Guseum of Gilitary Aviation. 'atents can generally only be enforced through civil la9suits ?for example# for a /) patent# by an action for patent infringement in a /nited )tates federal court@# although some territories ?such as 3rance and Austria@ have criminal penalties for 9anton infringement.D E Typically# the patent o9ner 9ill see6 monetary compensation for past infringement# and 9ill see6 an in7unction prohibiting the defendant from engaging in future acts of infringement. *n order to prove infringement# the patent o9ner must establish that the accused infringer practices all of the re>uirements of at least one of the claims of the patent ?noting that in many 7urisdictions the scope of the patent may not be limited to 9hat is literally stated in the claims# for example due to the :doctrine of e>uivalents:@. An important limitation on the ability of a patent o9ner to successfully assert the patent in civil litigation is the accused infringerCs right to challenge the validity of that patent. &ivil courts hearing patent cases can and often do declare patents invalid. The grounds on 9hich a patent can be found invalid are set out in the relevant patent legislation and vary bet9een countries. 0ften# the grounds are a sub8set of the re>uirements for patentability in the relevant country. 5hilst an infringer is generally free to rely on any available ground of invalidity ?such as a prior publication# for example@# some countries have sanctions to prevent the same validity >uestions being relitigated. An example is the /I &ertificate of contested validity. The vast ma7ority of patent rights# ho9ever# are not determined through litigation# but are resolved privately through patent licensing. 'atent licensing agreements are effectively contracts in 9hich the patent o9ner ?the licensor@ agrees not to sue the licensee for infringement of the licensorCs patent rights# usually in return for a royalty or other payment. *t is common for companies engaged in complex technical fields to enter into do;ens of license agreements associated 9ith the production of a single product. Goreover# it is e>ually common for competitors in such fields to license patents to each other under cross8licensing agreements in order to gain access to each otherCs patents. A cross license agreement could be highly desirable to

the mouse trap developers discussed above# for example# because it 9ould permit both parties to profit off each otherCs inventions. The /nited Nations )tatistics 2ivision reports that /)A 9as the top mar6et for patents in force in 2BBB closely follo9ed by the (/ and !apan. 0(nership *n most countries# both natural persons and corporate entities may apply for a patent. The entity or entities then become the o9ners of the patent 9hen and if it issues. -o9ever# it is nearly al9ays re>uired that the inventor or inventors be named and an indication be given on the public record as to ho9 the o9ner or o9ners ac>uired their rights to the invention from the inventor or inventors. *n the /nited )tates# ho9ever# only the natural person?s@ ?i.e. the inventor/s@ may apply for a patent. *f a patent issues# then each person listed as an inventor o9ns the patent separately from the other. 3or example# if t9o inventors are listed on a patent# then each one may grant licenses to the patent independently of the other# absent an agreement to the contrary. *t is common in the /nited )tates for inventors to assign their o9nership rights to a corporate entity.DJE *nventors that 9or6 for a corporation# for example# often are re>uired to assign their o9nership rights to their corporation as a condition of their employment. *ndependent inventors often assign their o9nership rights to a single entity so that only one entity has the right to grant a license. The ability to assign o9nership rights increases the li>uidity of a patent as property. *nventors can obtain patents and then sell them to third parties. The third parties then o9n the patents as if they had originally made the inventions themselves. 1o&erning /a(s The grant and enforcement of patents are governed by national la9s# and also by international treaties# 9here those treaties have been given effect in national la9s. 'atents are# therefore# territorial in nature. &ommonly# a nation forms a patent office 9ith responsibility for operating that nationCs patent system# 9ithin the relevant patent la9s. The patent office generally has responsibility for the grant of patents# 9ith infringement being the remit of national courts.

There is a trend to9ards global harmoni;ation of patent la9s# 9ith the 5orld Trade 0rgani;ation ?5T0@ being particularly active in this area. The TR*'s Agreement has been largely successful in providing a forum for nations to agree on an aligned set of patent la9s. &onformity 9ith the TR*'s agreement is a re>uirement of admission to the 5T0 and so compliance is seen by many nations as important. This has also led to many developing nations# 9hich may historically have developed different la9s to aid their development# enforcing patents la9s in line 9ith global practice. A 6ey international convention relating to patents is the 'aris &onvention for the 'rotection of *ndustrial 'roperty# initially signed in $88 . The 'aris &onvention sets out a range of basic rules relating to patents# and although the convention does not have direct legal effect in all national 7urisdictions# the principles of the convention are incorporated into all notable current patent systems. The most significant aspect of the convention is the provision of the right to claim priority= filing an application in any one member state of the 'aris &onvention preserves the right for one year to file in any other member state# and receive the benefit of the original filing date. +ecause the right to a patent is intensely date8driven# this right is fundamental to modern patent usage. The authority for patent statutes in different countries varies. *n the /nited )tates# the &onstitution empo9ers &ongress to ma6e la9s to :promote the 'rogress of )cience and useful Arts...: The la9s &ongress passed are codified in title K of the /nited )tates &ode and created the /nited )tates 'atent and Trademar6 0ffice.DKE *n the /I# substantive patent la9 is contained in the 'atents Act $9%% as amended.D"E *n addition# there are international treaty procedures# such as the procedures under the (uropean 'atent &onvention ?('&@ Dadministered by the (uropean 'atent 0rganisation ?('0rg@E# and the 'atent &ooperation Treaty ?'&T@ ?administered by 5*'0 and covering $ % countries@# that centralise some portion of the filing and examination procedure. )imilar arrangements exist among the member states of AR*'0# 0A'*# the analogous treaties among African countries. #pplication Main article: Patent application

A patent is re>uested by filing a 9ritten application at the relevant patent office. The application contains a description of ho9 to ma6e and use the invention and# under some legislations# if not self evident# the usefulness of the invention. The patent application may or must also comprise :claims:. &laims define the invention and embodiments for 9hich the applicant 9ants patent rights. To obtain a patent# an applicant must provide a 9ritten description of the invention in sufficient detail for a person s6illed in the art ?i.e.# the relevant area of technology@ to ma6e and use the invention. This 9ritten description is provided in 9hat is 6no9n as the patent specification# 9hich is often accompanied by illustrating dra9ings. )ome countries# such as the /nited )tates# further re>uire that the specification disclose the :best mode: of the invention ?i.e.# the most effective 9ay# to the best of the inventorCs 6no9ledge# to ma6e or practice the invention@.D%E *n addition# at the end of the specification# the applicant must provide one or more claims that define 9hat the applicant regards as their invention. A claim# unli6e the body of the specification# is a description designed to provide the public 9ith notice of precisely 9hat the patent o9ner has a right to exclude others from ma6ing# using# or selling. &laims are often analogi;ed to a deed or other instrument that# in the context of real property# sets the metes and bounds of an o9nerCs right to exclude. The claims define 9hat a patent covers. A single patent may contain numerous claims# each of 9hich is regarded as a distinct invention. 3or a patent to be granted# that is to ta6e legal effect# the patent application must meet the legal re>uirements related to patentability. 0nce a patent application has been filed# most patent offices examine the application for compliance 9ith the re>uirements of the relevant patent la9. *f the application does not comply# the ob7ections are usually communicated to the applicant or their patent agent or attorney# 9ho can respond to the ob7ections to attempt to overcome them and obtain the grant of the patent. *n most countries# there is no re>uirement that the inventor build a prototype or other9ise reduce his or her invention to actual practice in order to obtain a patent. The description of the invention# ho9ever# must be sufficiently complete so that another person 9ith ordinary s6ill in the art of the invention can ma6e and use the invention 9ithout undue experimentation.

0nce granted the patent is sub7ect in most countries to rene9al fees# generally due each year#D8E to 6eep the patent in force. *n Egbert v. Lippmann,$BJ /. ). ?$88$@ ?the :corset case:@# the /nited )tates )upreme &ourt affirmed a decision that an inventor 9ho had :slept on his rights for eleven years: 9ithout applying for a patent could not obtain one at that time. This decision has been codified as K. /.).&. L$B2# 9hich bars an inventor from obtaining a patent if the invention has been in public use for more than one year prior to filing. $conomics Rarionale There are four primary incentives embodied in the patent system= to invent in the first place< to disclose the invention once made< to invest the sums necessary to experiment# produce and mar6et the invention< and to design around and improve upon earlier patents.D9E $. 'atents provide incentives for economically efficient research and development ?RM2@. Gany large modern corporations have annual RM2 budgets of hundreds of millions or even billions of dollars. 5ithout patents# RM2 spending 9ould be significantly less or eliminated altogether# limiting the possibility of technological advances or brea6throughs. &orporations 9ould be much more conservative about the RM2 investments they made# as third parties 9ould be free to exploit any developments. This second 7ustification is closely related to the basic ideas underlying traditional property rights. 2. *n accordance 9ith the original definition of the term :patent#: patents facilitate and encourage disclosure of innovations into the public domain for the common good. *f inventors did not have the legal protection of patents# in many cases# they 9ould prefer or tend to 6eep their inventions secret. A9arding patents generally ma6es the details of ne9 technology publicly available# for exploitation by anyone after the patent expires# or for further improvement by other inventors. 3urthermore# 9hen a patentCs term has expired# the public record ensures that the patenteeCs idea is not lost to humanity.

. *n many industries ?especially those 9ith high fixed costs and either lo9 marginal costs or lo9 reverse engineering costs F computer processors# soft9are# and pharmaceuticals for example@# once an invention exists# the cost of commerciali;ation ?testing# tooling up a factory# developing a mar6et# etc.@ is far more than the initial conception cost. ?3or example# the internal :rule of thumb: at several computer companies in the $98Bs 9as that post8RM2 costs 9ere %8to8$@. /nless there is some 9ay to prevent copies from competing at the marginal cost of production# companies 9ill not ma6e that producti;ation investment. J. 'atent rights create an incentive for companies to develop 9or6arounds to patented inventions# thereby creating improved or alternative technologies that might not other9ise be developed. 0ne interesting side effect of modern patent usage is that the small8time inventor can use the exclusive right status to become a licensor. This allo9s the inventor to accumulate capital >uic6ly from licensing the invention and may allo9 rapid innovation to occur because he or she may choose to not manage a manufacturing buildup for the invention. Thus the inventorCs time and energy can be spent on pure innovation# allo9ing others to concentrate on manufacturability.

Criticism 5hile each of the four incentives is achieved by the patent system in some contexts# the patent system has countervailing costs# and those costs fall more heavily in some contexts than others. There are many critics and criticisms of patents and this has resulted in the formation of a large number of groups 9ho oppose patents in general# or specific types of patents# and 9ho lobby for their abolishment. 'atents have al9ays been critici;ed for being granted on already 6no9n inventions. *n $9 8# for example# R. +uc6minster 3uller# inventor of the geodesic dome 9rote=D$BE At present ( !"#$, the (%& patent$ 'iles, are so extraordinaril( complex and the items so multitudinous that a veritable arm( o' governmental servants is re)uired to attend them and sort them into some order o' distinguishable categories to *hich re'erence

ma( be made *hen corresponding *ith patent applicants 'or the purposes o' examiner citation o' prior art+ disclosure. ,his complexit( ma-es it inevitable that the human. e)uation involved in government servants relative to carelessness or mechanical limitations should occasion the granting o' multitudes o' probabl(+ invalid patent claims.+ 'atents have also been critici;ed for conferring a :negative right: upon a patent o9ner# permitting them to exclude competitors from using or exploiting the invention# even if the competitor subse>uently develops the same invention independently. This may be subse>uent to the date of invention# or to the priority date# depending upon the relevant patent la9 ?see 3irst to file and first to invent@.D citation neededE 'atents may hinder innovation as 9ell. A holding company# pe7oratively 6no9n as a :patent troll:# o9ns a portfolio of patents# and sues others for infringement of these patents 9hile doing little to develop the technology itself.D citation neededE Another theoretical problem 9ith patent rights 9as proposed by la9 professors Gichael -eller and Rebecca )ue (isenberg in a $998 &cience article.D$$E +uilding from -ellerCs theory of the tragedy of the anticommons# the professors postulated that intellectual property rights may become so fragmented that# effectively# no one can ta6e advantage of them as to do so 9ould re>uire an agreement bet9een the o9ners of all of the fragments. )ince at least the early $98Bs# patent offices have accepted that computer programs can lie 9ithin the realm of patentable sub7ect matter# although the regulations for 9hen a computer program is a patentable invention differ mar6edly bet9een countries. *n response to perceived problems 9ith the grant of patents# and the evolving nature of technology and industry# there is debate about# and reform of# patent systems around the 9orld. The TR*'s agreement# developed by the 5T0 has led to the alignment of many patent systems 9ith regard to certain controversial issues# such as 9hat can be protected by patents and the issue of compulsory licences in cases of national need. $tymology The term :patent: originates from the .atin 9ord patere 9hich means :to lay open: ?i.e.# ma6e available for public inspection@ and the term letters patent# 9hich originally denoted royal decrees granting exclusive rights to certain individuals or businesses.

'istory /or more details on this topic, see 0istor( o' patent la*. /.). 'atents granted# $8BBN2BBJ.D$2E There is evidence suggesting that something li6e patents 9as used among some ancient ,ree6 cities. The creator of a ne9 recipe 9as granted an exclusive right to ma6e the food for one year# and a similar practice existed in some Roman cities. Dcitation neededE 'atents in the modern sense originated in *taly in $J%J.D$ E At that time the Republic of 4enice issued a decree by 9hich ne9 and inventive devices# once they had been put into practice# had to be communicated to the Republic in order to obtain the right to prevent others from using them.D$JE (ngland follo9ed 9ith the )tatute of Gonopolies in $"2 under Iing !ames *# 9hich declared that patents could only be granted for :pro7ects of ne9 invention.: 2uring the reign of Oueen Anne ?$%B2N$%$J@# the la9yers of the (nglish &ourt developed the re>uirement that a 9ritten description of the invention must be submitted.D$KE These developments# 9hich 9ere in place during the &olonial period# formed the basis for modern (nglish and /nited )tates patent la9. *n the /nited )tates# during the colonial period and Articles of &onfederation years ?$%%8N$%89@# several states adopted patent systems of their o9n. The first &ongress adopted a 'atent Act# in $%9B# and the first patent 9as issued under this Act on !uly $# $%9B ?and the sub7ect matter of that patent 9as for the ma6ing of potash@. 2inancing Sources Resources (ntrepreneural frugality?pagtitipid@ means=.o9 overhead?operating cost@# -igh productivity# Ginimal o9nership of capital assets# A form of securities offering in 9hich an investor purchases part of a business.# The term seed suggests that this is an early investment# meant to support the business until it can generate cash of its o9n# or until it is ready for further investments. Seed money 8 )ometimes 6no9n as seed funding. 3lood Money -itting up family and friends is the most common 9ay to finance a start8up. *tCs also the ris6iest. 3orro(ing,

#&oiding Pro4lems (ith 2amily and 2riends 5hen entrepreneurs borro9 start8up capital from family members or friends# itCs best to prepare for the 9orst 88 before it happens. 3orro(ing Money for 5our 3usiness 5hether you borro9 money from a ban6 or someone you 6no9# you should sign a promissory note88a legally binding contract in 9hich you promise to repay the money. Steps to 3orro(ing from 2amily or 2riends Ieeping the relationship professional is the 6ey to successful borro9ing from close ac>uaintances. Try 3ank 3orro(ing ban6 financing isnCt impossible. #ngel In&estors 9ill not only share their money< theyCre also great sources of 6no9ledge for fledgling businesses.There are 6 2s first is 2ounders 7 first class entrepreneur# 2ocused N focus on niche mar6ets# speciali;e# 2ast 7 decision ma6ing# implementation# 2le8i4le 7 open mind# respond to change# 2ore&er inno&ating# 2lat 7 organi;ations# 2rugal 7 lo9 overhead# productivity high# 2riendly 7 to their customers# suppliers# 9or6ers# 2un 7 to be associated 9ith an entrepreneur company. )eed money options include friends and family funding# angel funding andFrecently 88 cro9d funding. Tapping 2amily and 2riends 8 Tapping personal ties to raise cash for a company thatCs either too ne9 or too small to get financing else9here is an age8old formula that still ma6es sense. +ut hereCs one ris6 too big to ignore in todayCs highly competitive capital mar6etplace= if you donCt follo9 professional standards in structuring and documenting :3M3: loans or e>uity arrangements# your sloppiness 9ill li6ely come bac6 to haunt you. ThatCs because if and 9hen your company gro9s to the point at 9hich it can credibly approach ban6s or professional investors for funds# their la9yers 9ill examine your corporate capitali;ation structure 9ith a fine8tooth comb. Resources means that the entrepreneur should be frugal it means that lo9 overhead# high productivity# and minimal o9nership of capital assets. 2inancial Resources Components, $. *nvestor

2. . J.

+usiness )ector 3unding Agencies# and 3inancial )ervicies 5e had also discussed about SEED Money sometimes 6no9n as S$$! 2unding. *t is a form of securities offering in 9hich an investor purchases part of a business. The term seed suggest that this is an early investment# meant to support the business until it can generate cash of its o9n# or until it is ready for further investments. The 6 29s,

$. 2. . J. K. ". %. 8. 9.

3ounders N first class entrepreneur 3ocused N focus on niche mar6ets# speciali;e 3ast N decision ma6ing# implementation 3lexible N open mind# respond to change 3orever N innovator 3lat N organi;ations 3rugal N lo9 overhead# productivity high 3riendly N to their customers# suppliers# 9or6ers 3un N to be associated 9ith an entrepreneur company No9 that you have a better sense of ho9 much capital you are going to need# it is time to thin6 about funding your small business idea. )everal funding options may be available to you# including= P )eed financing ?funding out of your o9n poc6et@ P 3amily funding ?funding from relatives and friends@ P +an6 loans ?and other financial institutions@ P 4enture capital P )ale of capital stoc6

P ,rants ?from government and non8government organisations@ P &orporate partnerships

5hen exploring your funding options# there are several factors to consider= P Are your needs short8term or long8termQ *f you borro9 money# ho9 >uic6ly 9ill you be able to pay bac6 the loan or provide return on the investorsA investmentQ P *s the money for operating expenses or for capital expenditures that 9ill become assets# such as e>uipment or propertyQ P 2o you need all the money no9 or in smaller pieces over several monthsQ P Are you 9illing to assume all the ris6 if your small business doesnCt succeed# or do you 9ant someone to share the ris6Q The ans9ers to these >uestions 9ill help you prioriti;e the many funding options available. .etAs have a loo6 at a fe9 funding options. Seed 2inancing 5hen you resort to see financing# it means that you youAre your business idea from your o9n poc6ets# usually 9ith a relatively small amount of personal funds. This may include money saved from other forms of income you may have. This funding option is often referred to as o(nership capital-o(ners e:uity funding. )eed financing is probably the easiest form of money to obtain# since you 9ill be the only person ta6ing the ris6. *t also means that you can probably expect to receive the greatest re9ard 9hen your investment pays off. The problem is that you have to have other sources of income# such as 9or6ing another 7ob# 9hile gro9ing your o9n small business. (xamples of seed financing may include= your assets# savings# an e>uity loan on your house# credit cards# and secondary income.

2amily 2unding Relatives and friends may agree to give or lend you money to start your business venture. They are typically less stringent regarding your credit history and they may have lo9er expectations regarding their return on that investment. -o9ever# you are more li6ely to regret the transaction should your business fail. *t is important that you carefully choose the ones 9hom you can as6 for start up money. They may recall their funds at times 9hen the business is least able to return them# or they may demand a greater or additional involvement in the venture 9hich 9as not a part of your plan. There needs to be a lot of trust and perhaps a lot of ability to forgive. Partnerships 5hen ta6ing advantage of family funding to fund your business it is advisable that you structure the deal 9ith the same legal scrutiny you 9ould 9ith anyone else or it may create problems do9n the road 9hen you loo6 for additional financing. 'repare a business plan and formal documents= it 9ill ma6e both you and your family member or friend feel better and itCs good practice for later. There should be a 9ritten agreement bet9een the partners listing duties# responsibilities# amount of capital one has to contribute and also the proportion of profit sharing. This 9ill help if differences should arise regarding 9ho should do 9hat and 9ho should get 9hat out of the business. 3ank /oans +an6 loans are usually offered by commercial ban6s and other financial institutions. They can be a main source of financing# not only to business entrepreneurs# but also to the community at large for 9hat ever purpose intended. +an6 loans come in all shapes and si;es# from microloans# typically offered by local community ban6s# to six8figure loans usually offered by ma7or national ban6s. .arge loans are much easier to obtain 9hen bac6ed by assets ?e.g.# home e>uity@ or third8 party guarantors ?using a co8signer@.

*f you obtain a line of credit rather than a fixed8amount loan# you donCt start paying interest until you actually spend the money. .oans are offered at different rates of interest. *t is important that in your financial planning you ta6e into account the interest rate and repayment schedule. 1ou must decide the repayment intervals and ho9 much you 9ill be able to pay at each interval. That is ho9 often 9ill you be able to ma6e a payment on your loan and ho9 much ?e.g.# 9ill you pay 9ee6ly# monthly# >uarterlyQ@.

;enture capital 4enture capital funds are invested in ne9 or higher ris6 enterprises# by outside investors. 4enture capital investments usually are high ris6 investments< ho9ever# they offer the potential of very high returns. The ne9 entrepreneur see6ing venture capital investors have the option of see6ing the support of others 9ho have had the experience of using venture capital. This person does not only have the experience in ac>uiring/finding venture capital< but# can also provide the ne9 entrepreneur 9ith support and direction concerning starting up. Sale of Capital Stock 1ou may sell some of the capital stoc6 of your business in exchange for funds needed to operate the business. 1ou may sell these shares to an individual# though a private sale# or on the open mar6et# in 9hich case the shares 9ill then be purchases by interested parties or individuals. The sale of capital stoc6 provides you 9ith immediate funding. The parties/individuals buying the shares become shareholders and must be assured of some returns on the money they have invested into that business venture. 1rants ,rants are made available through governments and through non8governmental organisations ?N,0s@. ,overnments and N,0s aim to support small business development 9ith a focus on innovation. Therefore# often times you 9ill see grant money available for innovative start8up small businesses. This is a great source of funding# as it is Rfree moneyS< ho9ever# grants tend to be very competitive and closely define ho9 the money is supposed to get spent.

Corporate partnerships 3orming a partnership 9ith an existing corporation may also be an option to fund your small business. -o9ever# you may have to be prepared to relin>uish a certain level of control from your o9n business. +y investing in small businesses# large companies can 6eep up 9ith fast8paced developments and innovation typical of small enterprises. This investment techni>ue is referred to as *indo*ing in on recent entrepreneurial developments.

Advantages The advantages of partnering 9ith a larger company to fund your business include= P -eightened credibility 9ith customers and ban6ers< P (xpert managerial assistance< P &ontinuing source of financing< P )mall burden of ris6. Disadvantages The disadvantages of these partnerships include= P .oss of substantial e>uity< P *nvestors tend to ma6e most of the decisions< P Ris6 of ta6eover.