Get Funded: A Look at Funding Options for Startups
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.
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 investment—and more than 500 platforms, including many niche sites, which support them.
Eight Established Crowdfunding Platforms to Explore:
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:
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