How to Make Your Start-Up Successful With OPM Strategy

[Mika]

Do you know what the common factors of all successful start-ups are? These start-ups use a strategy called OPM.

OPM is the abbreviation of Other People’s Money

Successful start-ups get money from

Angel Investors

Venture Capitalist

Common people through IPO

They use other people’s money in their business and become successful.

Generally speaking, there are two major benefits of OPM.

When you fund your project through a bank loan, you will have to pay interest. It does not matter whether you are successful or not, you will have to pay interest every month, for many years. However, when you use investors' money your investors will not only bear profits but also losses.

When you fund your start-ups through burrowed money, you will have to return the money. Lenders will never care whether you are doing good or not. However, when you get money from investors, you do not have to return the money even when you encounter a loss.

 

[Jasmine]

Other People's Money that's an interesting term in the business world. Not just the business, even the government becomes rich with other people's money (because government collects tax from businesses and individuals). Most of the big businesses are public limited companies. Public limited companies means the company sold its stocks to the public. These companies collected money from the public, invested in the company, and managed to earn big profits, and they managed to grow bigger all the while paying very small profit percentage to the people. However, before they started using other people's money, these companies used founders' money to create a product or services that a lot of people would like. They managed to build successful business before they collected money from the people. In order to become successful these companies have invested a time, effort and money. By taking your money, they are also paying you profits.