Best funding options for startup companies

Most of the businessmen are unaware of the fact that there are more than 20 funding sources available to get the money needed to fund a business vision, idea or project. Te sources are categorized into two main groups, Bootstrapping and Equity Financing.

Bootstrapping which means when the Entrepreneur decides to go it alone using on the ground resources from personal savings to second mortgages and funding. Now coming to Equity Financing which is when you the Entrepreneur decide to give up a percentage of the ownership of your company in exchange for needed capital. Here are few sources to make these definitions more clearly to you:

Bootstrapping Early Sources

1. Founders' Capital


2. Savings


3. Credit Cards


4. Second Mortgage


5. Venture Leasing


6. Sales Revenue

Bootstrapping Later Sources

1. Lines of Credit


2. SBA Loans


3. Asset Backed Lending / Accounts Receivable Factoring, etc


4. Corporate Strategic Partnerships


5. Banks that Lend To Start-Ups


6. Government Grants (e.g SBIR, DARPA)


7. Company Earnings

Some more facts are left out for Equity Financing, depending on the source one may have to give up 25%-75% ownership of the company which usually depend on the nature of the deal and what can be negotiated. Under Equity Financing you must also be aware that there are Early and Later Stage Sources. So here are variety of sources:

Equity Financing Early Sources

1. All Bootstrapping Early Sources


2. Friends & Family


3. Angels


4. Angel Groups


5. Early Stage Venture Capital Firms

Equity Financing Later Sources

1. All Bootstrapping Sources


2. Venture Capital Firms


3. Corporate Venture Funds


4. Private Equity Firms


5. Private Placement Firms


6. Mezzanine Financing Firms


7. Investment Banks


8. Public Markets

Make sure your Business Plan is strong and paints an accurate picture of your business idea or project in order to make a sound financial decision. One more thing to keep in mind is that the performance and Valuation of the business must be honest and realistic. Angel investors and Venture Capitalist are only going to back ideas and companies that are going to surrender the safest and strongest (ROI) return on their investment. Here further more information for Angel investors and the best funding options for the new businessmen.