Startups actively seeking early stage funding will find that there are quite a few alternatives to traditional venture capital firms. Seed capital funding programs can make a huge difference in results for early stage fundraising. So, if your startup is looking for funds matched to VC investment, here are a few places to begin:
The potential for a startup within a unique market segment will often lead to fundraising contributions by an angel or super angels. Angel contributions, by an independent investor, are distinct from traditional venture capital fundraising, in the sense that contributions may go toward research and development of an innovation leading to patent.
As Ben Horowitz explains in a BI article, “Angel investors are typically well-connected, wealthy individuals. They generally use their own money and come with none of the above VC constraints describe above: they don’t go on boards, they don’t need to put in lots of capital (in fact, they usually don’t want to), they prefer dead simple terms (as they often don’t have legal support), they understand the experimental nature of the idea, and they can sometimes decide in a single meeting whether or not to invest.”
Not to be mistaken with Angel investors, this accelerator program created by former Google employees assists web technology entrepreneurs with improving the quality of their products, as well as education on seed funding. The 10-week mentorship program takes place in San Francisco, ending with a demo day introduction to several hundred potential investors. AngelPad also manages the business side of the partnership (i.e. immigration visas, incorporation, and accounting partnerships) for flagships ready to take off.
Family and Friends
The old adage that blood is thicker than water still holds true. Entrepreneurs that are able to tap resources from family members and friends can improve liquidity without upfront costs and interest rates attached to standard small business loans. If you have friends and family members with deep pockets, the transformation of a startup to successful enterprise, and future initial public offering (IPO), offers a great opportunity for major returns on investment for family shareholders.
This tech microfund pools from startups within data systems, healthcare IT, and social engagement industries in the Southeastern United States, placing itself in a unique position to prepare small businesses for future growth. The Foundry launches approximately six new startups each year. Jumpstart Fundamentals offers participants insights into fundraising. Partnership with angel investment firms provides the Foundry’s funding capacity for new projects. Pilot startups are offered business, technical, and other assistance with funding.
The competition based, Launch 1.0 and 2.0 are designed for introduction of new products, and startups without press or public demonstration exhibiting services in closed alpha or beta. The competition consists of an onstage presentation, and Q&A session. Forty companies will launch for the first time (1.0 Track) or launch new products (2.0 Track) and compete for titles like Best Design, Best Technology and Best Overall with 8,000 attendees making it the largest live audience in technology. Meanwhile, $250K is made available from the LAUNCH Fund.
Depending on the industry that your venture is targeting, the federal government has specific grants available to ventures. For instance, in the business telecom industry a Telecommunications Development Fund is provided to the tune of one million dollars for small companies who gross less than 50 million dollars per year. There are many more types of development funds and grants available to specific industry ventures.
Small Business Loans
Startups seeking debt-based funding can apply for a small business loan through the U.S. Federal Small Business Administration. The SBA also has partner programs that offer surety bonds and venture capital opportunities depending on your specific situation.
Erika Remmington is a business writer and recent graduate of the University of California, Berkeley. She is writing this article on behalf of Carrier Sales, a supporter of entrepreneurial growth. She enjoys spending her time with her husband and 18 month old daughter. She also enjoys rock climbing and out door activities. Connect with @ErikaRemm on Twitter.
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