An recent article in the Puget Sound Business Journal asks: “What do Seattle startups need besides money?” If you want to learn more about the other thing they need most (talented people to round out their teams), check out the article.
But let’s get back to that first thing: money.
Product development, marketing, buying equipment, renting space, setting up a website, salaries, legal fees…these things all cost money. And when you’re just starting out it can often seem like everything costs more than expected. In software development there’s a truism that  “everything takes twice as long and costs twice as much” as planned. That can also feel true for start-ups in any industry.
Over the years I’ve helped companies to access different types of funding sources both in the start-up stage and mid-stream. Lately you may have heard a lot about some intriguing new “crowdfunding” sites like Kickstarter, but depending on your company’s situation, industry, product, how much money you need to raise and other factors, more traditional funding avenues may be a better fit.
The various types of funding include equity (where you give up a percentage share of ownership in the company in exchange for financing), debt (where you are borrowing money that you will have to repay), grants (e.g., from the government), and self-funding (dipping into your own pocket).
Equity financing sources include angel investors and venture capitalists and strategic partners, as well as less formal sources like your own professional network and friends and family. Debt financing sources include bank loans and loans through the Small Business Administration (SBA).
Some other sources are more specialized – these include grants, incubator programs, and the crowdfunding sites mentioned above. In the coming weeks, I’ll talk more about each type of funding source, some of the pros and cons of each, and how to assess the different financing avenues available for your venture.