Insolar Brazil Company’s Internal Sources of Funding Case Study

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Insolar Brazil lacks essential internal finances in order to develop itself in the long run. The majority of the projects are considered to be beneficial and profitable after a long period and require significant funding. For this reason, the organization predominantly relies on the support of the government. In addition, local multilateral organizations may provide necessary financial help. Apart from these options, another potential source should be determined, as the solar energy sector implies considerable expenditures. Inter-American Development Bank appears to be the solution to this problem. Its interests include investing in community-led development projects in Latin America (Brazil to push private investment in clean energy with $750 million in IDB resources, 2016). Consequently, it presents the major source of funding for Insolar of Brazil and provides money for several long-term projects, which contributes to the development of this sector.

The advantages of receiving finances from internal sources are evident. There is no need to divide ownership, control, and profit with an external investor. Consequently, it is possible to make decisions without the necessity to come to an agreement with a stakeholder and considering his or her benefit. In addition, internal funding does not imply any legal obligations for the investor. Reflecting on the long-term perspective of the business, this method of receiving money makes the company more valuable and improves the credit rating. However, there are some drawbacks, which are associated with internal finances. For instance, it is not helpful for launching long-term projects, which is especially significant for Insolar of Brazil, considering the specifics of its field. Another negative consequence includes the impact on other business operations. In case Insolar of Brazil invests in long-term projects, daily operations may lack financial support.

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IvyPanda. 2022. "Insolar Brazil Company's Internal Sources of Funding." July 16, 2022. https://ivypanda.com/essays/insolar-brazil-companys-internal-sources-of-funding/.

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