Types of Funding - II

Money doesn’t grow on trees and you need money to convert your Idea into a great product. An entrepreneur needs funding at various stages.


Venture Capital


Venture capitalists are professional investors who invest in startups and growing companies. This makes them a receptive audience when you're looking for investors to pitch. However, you'll generally need to be past the earliest stages because the typical venture capital investment is $1 million or more. It may also take many months to close the deal.

It is highly recommended to read this guide on how to get venture capital and the most important things startups must do beforehand.


Loans / Debt


New businesses can find it challenging to get a traditional loan from a bank unless they have business assets for collateral and/or are willing to personally guarantee the loan (e.g., by putting up the equity in their house). However, the federal Small Business Administration (“SBA”) offers several small business loan programs that can help you get approved. Some entrepreneurs also may utilize credit cards, microloans or venture debt to finance their companies.


Small Business Grants

Grants provided by the government or private organizations can provide free funding. To receive a grant, your company may need to be engaged in some sort of societal good or specialized area, such as education, medicine, or alternative energy. You can search for grants at grants.gov.


Barter

Many businesses understandably prefer to be paid in cash, but there is still room for trade in the modern economy. Look for small businesses that can fulfill one of your needs and have a problem that you can solve. You may be able to trade your services in exchange for something you need (e.g., agreeing to do IT for a company in exchange for using their office).


Partnership

Sometimes, growing on your own isn't the answer. Instead, you may want to create a partnership or licensing deal with an established company that can benefit from your product.


1 view0 comments

Recent Posts

See All