Own or external capital

Own money or assets of monetary value invested in the company by the entrepreneur are own capital. External capital is all capital raised outside the business.

Own capital

Own capital consists of own capital invested in the company or retained earnings which have not been paid e.g. as dividends to the shareholders.

Own capital can also be something else than money such as machines and equipment. Then it is called assets. Assets have to be of financial value to the company and an asset cannot be a commitment to perform work.  

External capital

External capital refers to money that comes from outside the business from e.g. banks, business angels or friends and family.

Commercial banks as well as the specialised financing company Finnvera (link will open in new tab), which is owned by the State of Finland, grant loans. Leasing, credit accounts and credit cards offer financial aid, too. 

Private equity investors or shareholders are private equity companies or business angels who invest into the business in return for partial ownership.

Investments can be made by family members, friends, acquaintances or any other person, company or community. Money can be invested in return for shares or given as a loan.