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Get Funded: A Look at Funding Options for Startups

Posted on 1.01.2014

There’s no golden ticket hidden in the options for funding a startup in the 2014 economy.  

Credit cards, savings, loans and gifts from friends and family still top the list, but it’s worth exploring other options like crowdfunding and Angel Investors.

CROWDFUNDING

The term Crowdfunding has become so mainstream that it may be something people think they know more about than they actually do. Crowdfunding comes from an online appeal directly to individuals, organizations or communities outside of the securities arena. There are two funding models—donation and investmentand more than 500 platforms, including many niche sites, which support them.

Eight Established Crowdfunding Platforms to Explore:

Kickstarter

WePay

Indiegogo

Crowdfunder

RocketHub

GoFundMe

Crowdrise 

Angellist

ANGEL INVESTORS

A second option, beyond a startup owner's personal wallet, is connecting with an Angel Investor. "Angels" are individuals with a high net worth who also meet the U.S. Securities and Exchange Commission's (SEC) definition of an accredited investor. The Angel provides money, up to $1.5 million, to a startup in exchange for equity.

Like in most initiatives, having a niche helps one stand out. Startups should locate angel networks that offer niche funding, like 37 Angels for female entrepreneurs or Vet-Tech Funding Network, which provides funding for Veterans. Consider searching for Angels in your own circles, too. An Angel can also be a family member, college buddy, former colleague or any acquaintance willing to offer his or her financial blessing to the startup.

Angel Platforms to Explore:

AngelCapitalAssociation

Angel Investors of Chicago

Gust

37 Angels

Vet-Tech Funding Network 

 

FUNDING THE OLD FASHIONED WAY

As previously mentioned, many startups are funded the old-fashioned way with bank loans, gifts and or personal savings. Three loan options for startups either backed or offered by the Small Business Administration (SBA) are:

• 7(a) Loan Program, the most popular, offering up to $750,000 through financial institutions, not the SBA directly

• 504 Loan Program, specifically for purchasing assets

• 7(m) Microloan Program, for amounts less than $35,000, offered directly from the SBA

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