8 Options Entrepreneurs Utilize for Startup Concept Funding

Entrepreneurs have numerous options for obtaining funding to explore and validate their startup concept. Some of these concept funding options include:

  1. Self-Funding – Most startups are funded in the beginning, at least partially, by the entrepreneur. Such funding is derived from personal cash reserves, personal loans, credit cards, home equity loans and for older entrepreneurs, from self-directed 401Ks.
  2. Family and Friends – An excellent source for early funding of concepts is family and friends. However, the entrepreneur should be careful that expectations are appropriately established to avoid future misalignment with these investors.
  3. Loans – Various options exist for obtaining loans including the SBA, Community Banks and Credit Unions. However, the entrepreneur should recognize that loans not only increase the risk of the venture as such obligations must be re-paid, but the documentation related to obtaining an SBA loan is extensive and time consuming and the Community Banks and Credit Unions require extremely high qualification standards.
  4. Pitch Contests – Business Pitch Competitions like the Amazon Web Services Pitch Events, the COSE Business Pitch Competition and 43North not only provide funding for finalists but help validate the concept.
  5. Accelerators – Accelerators like The Jumpstart Foundry, Tech Stars and Y Combinator provide cash, educational programs and mentors for participating companies.
  6. Grants – Both the State and Federal governments and many trade associations and foundations offer grants based on needs in various functional disciplines. Special programs may be available to minorities, woman and single mothers.
  7. Crowdfunding – The Crowdfunding “Money for Goods” funding model provides entrepreneurs an internet based model for funding business concepts. A large number of such models currently operate across the globe.
  8. Angels – Concept and seed stage companies may be of interest to individual angels, super angels and angel groups with a focus on companies in this stage.

The Concept section of our Funding Lifecycle is packed with information to help you get started. You can also focus your efforts by using FundingSage’s Premier Tools help you navigate several of these options.

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Tony Lettich

Tony Lettich has previous corporate venture capital experience and currently serves as Managing Director of The Angel Roundtable. He is a co-founder of FundingSage, which provides valuable information, tools and resources to entrepreneurs seeking to start, grow and fund a business.