There are many ways to fund startups. Our team has found 32 (so far) different strategies to fund startups to help you build your own Capital Strategy.
YOU WILL LEARN:
The many different funding options for startups
How to know which type of funding you are a good fit for
The risks involved in each type of funding
Case studies of real companies that have used each type of funding
Credit cards are a major source of financing for small-business owners, with 31 percent of small businesses having used credit cards in the past 12 months to help finance capital needs, according to the National Small Business Association’s (NSBA).
Debt financing is a powerful, yet underutilized tool for financing startup companies.
A term loan is a loan from a bank for a specific amount that has a specified repayment schedule and a fixed or floating interest rate. For example, many banks have term-loan programs that can offer small businesses cash to operate from month to month.
Self-financing is when a founding team invests their own capital to fund the company.
Venture capitalists are professional investors who invest money raised from high net worth individuals called Limited Partners (LPs). VCs invest in companies in exchange for a return on investment in the future, generally within 5-7 years. The higher the return multiple, the better. Often a mix of former founders and financial/banking experts.
Incubators focus on coworking space, mentorship, often lasting more than a year and a half, and may or may not prioritize quick growth. They likely have no specific goal in mind for the company other than to become successful at the right pace or to prepare for an accelerator program. Business incubators either make money by charging rent, or are sometimes funded by grants through universities, allowing them to provide services at a low- to no-equity cost.
Bootstrapping is when an entrepreneur founds and builds a company from the operating revenues of the new company.
Grant agencies provide funding for businesses, largely from taxpayer money. Grant agencies have widely-variable grant programs, but generally focus on specific industry sectors, job growth, technology development, and minority business owners.
Corporations give in various ways, including cash donations or grants, in-kind gifts, sponsorships, cause-related marketing, and pro bono services. Companies also like to promote workplace giving through employee matching gifts programs and other efforts that encourage their employees to give their time and/or money to charity.
Business competitions are competitions where a group of businesses compete for (usually) non-dilutive prize money. To enter, companies generally fill out an application, often including a pitch deck or business plan, and are scored by a panel of judges. Businesses then generally compete with other businesses in a presentation competition for prizes of cash or services.