Intergenerational transmission of inequality – investment round

How hard would you work on developing skills, ideas and networks for the purpose of building a business in the following two conditions:

1) You have zero expectation of any funds available on concessional terms, including lower interest rates. Any additional funds will come through a formal financial institution and will face all requirements associated with this (write a business plan, show pre-existing activity which you aim to upscale, or the presence and barriers to entry in a given market).

2) You have a somewhat wealthy relative (or someone close to the family) who likes to invest in up and coming ideas, in part because part of the way that they made their money was a similar event from a relative or someone close to the family. You know that if you ever have a promising idea and can develop it to the point that it is “real” and demonstrates some promise for profitable upscaling of the activity, that it is not a matter of selling your case to the bank, but rather of making the case to this (or one of the) wealthy benefactor(s), who is most likely to be in the family or close to the family.

I think it is more than a matter of curiosity to wonder about the profitability of investments which have been formally vetted by a financial institution and otherwise. But, I think it’s also a lot easier to get a loan when you can go to the bank and say “here are 1-3 people who are willing to put 10k-100k into my business.”

About admin

Some guy
This entry was posted in Business and entrepreneurship, Development, Economics, social and commercial policy. Bookmark the permalink.

Leave a Reply