Capital. So often, it’s there when you don’t need it, and gone when you do — especially in times of crisis. Here are 16 places you can look for the capital your business needs to get out of the doldrums and hit that next major milestone. Article #12 in a series exploring the big questions that entrepreneurs ask as they’re starting up and growing their businesses.
Know when you’ll need capital the most
Depending on your industry, there are specific stages of development where you’ll be most likely to need capital to fund growth. For example, manufacturing- and research-based industries have high upfront costs that may require a lot of startup capital. Most other businesses see more demand for capital at later stages (for example, Stage IV in the model below).
The best time to start investigating sources of growth capital is during the previous growth phase. For most companies, that’s Stage III(-G) in the model above. So where do you turn?
The “Big-16” sources of capital
Here are the 16 biggest sources of growth capital that growing (or preferably, soon-to-be growing) companies can leverage to fund their expansion:
- Operating income and profits (aka retained earnings, working capital)
- “Bootstrapping” (personal investments from founders/owners)
- “Friends and Family” (typically debt capital)
- “Crowdsourcing” (e.g., GoFundMe, Kickstarter, etc.)
- Grant and economic development program funding (e.g., Grants.gov)
- Small Business Innovation Research (SBIR) / Small Business Technology Transfer Programs (STTR) programs
- Incubators and accelerators
- Corporate funding (e.g., corporate venture capital or corporate grant)
- Startup pitch competitions and awards
- Business loans (debt capital, e.g., SBA.gov)
- Angel investors (equity capital)
- Venture capital (equity capital)
- Sale of bonds (debt capital)
- Acquisitions/buyouts (debt and equity mix)
- IPO/Public markets (equity capital)
- Post-IPO finance options (aka secondary offerings, buyouts, etc.)
Have you secured growth capital? How did the process go for you? Let us know in the comments below.