Question: Should I self-fund my startup or look for external investment?
When considering to increase your startup funds, you can either:
seek external investment, or
You may choose to pursue external investment instead of funding your startup yourself. Doing so spreads your personal risk and liability. If you trade as a company, your company has limited liability in the event that your business fails. However, you can still be personally liable if you breach your duties as a director.
If you are self-funding your startup, you personally undertake to pay back that sum. You may self-fund through credit cards or personal loans. If you are unable to pay back any money you owe, your personal assets may be at risk. The lender may be able to seize both your business and personal assets. A default on a personal loan may also risk the assets of any guarantors who have given an undertaking to pay your loan if you fail to.
Answered by Kirstie Le Lievre
Kirstie is a lawyer in the general commercial, disputes, franchising and leasing teams at LegalVision. Kirstie has a background in civil litigation and project management.
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