Available Forms of Financing

Obtaining capital for a start-up is not an easy task, especially when the need for capital occurs pre-product completion and before the proof-of-concept that a traditional venture capitalist is seeking. To meet these early capital needs, there is often resort to one or more of the “bootstrapping” techniques as a first attempt to raise capital.

 

·        Personal Assets - whatever cash resources founders can muster – savings, home equity loans, credit cards.

 

·        Co-Founders - find others who share the company’s dream, can work without compensation and provide needed skills & cash investment.

 

·        Friends & Family - are often easiest to raise capital from, but must be authentic about the potential loss of 100% of funds given.

 

·        Vendors - sometime start-up vendors are willing trade all or a portion of their services for equity.

 

·        Strategic Alliance and Joint Ventures – a collaborative arrangement with an established company that has complementary needs or objectives.

 

·        Angel Investors - if wealthy individuals or small angel networks are in your community, they could be approached for financing. There are also some great sites like AngelList and Gust that can link startups and angel investors.

·        Crowd Donations Sites - sites like and IndieGoGo have made it easier to raise capital via donations from a crowd, without giving away any equity in business.

 

·        Venture Debt - similar to bank loans, there are loans from venture debt companies.

 

·        Small Business Grants - sometimes free state and federal grants are available if a startup is helping to solve a bigger problem (e.g., healthcare, education, energy consumption).

 

·        State and Federal Financing Programs – a variety of loans and subsidies are available for small businesses from the government.  

 

·        State Tax Credits & Programs - be sure to look for any state tax credits that may be available for startups, to reduce tax bills or offset salaries from new jobs created.

Leave a comment

Make sure you enter all the required information, indicated by an asterisk (*). HTML code is not allowed.