Entrepreneurs, inventors and founders call me asking for advice on finding funding. They often think about the “family and friends” approach or dealing with those blood-sucking VCs.
But there are other sources of funding for a new startup.
Below are 9 sources of capital that I can think of right now:
1/Self-funding: Using personal savings or assets to fund the startup.
2/Seed money: Early-stage funding typically provided by angel investors or seed-stage venture capital firms to help a startup develop its business model and achieve initial traction.
3/Angel investors: High-net-worth individuals who provide capital in exchange for equity in the startup.
4/Venture capital: VC investment firms provide capital to startups in exchange for equity.
5/Crowdfunding: Raising small amounts of money from a large number of people, typically via the internet. Monogram Orthopedics showed us all how it can be done here by raising $22M with 13,000 crowd funding individuals.
6/Incubators and accelerators: Organizations that provide funding, office space, mentoring, and other resources to startups in exchange for equity or a percentage of revenue. There is probably on in your city today.
7/Government grants: Funding provided by government agencies to support innovation and research in certain sectors. Government organizations like DARPA will give you free money if you have an interesting proposal.
8/Bootstrapping: Building a company from the ground up with little or no outside funding. This is my favorite in the early months in order to reach proof-of-concept.
9/Debt financing: Raising money by borrowing from banks, financial institutions or individuals.
Royalties financing: Raising money by selling the rights to future revenue streams generated by the business.