For everything else, including most manufacturing operations, food products, and service businesses, capital from angel funds and venture capital funds is not typically a good fit. In order to finance the startup of those businesses, entrepreneurs typically turn to other funding sources.
Will usually issue loans to finance the startup of a business to borrowers with good credit and sufficient personal assets to collateralize the loan. Banks will typically require a full business plan, financial projections, and some history of success in the same field.
FRIENDS & FAMILY
Often the first sources of outside capital for a new business, friends and family (sometimes accompanied by fools), are frequently happy to invest in a loved one’s new project. Use caution however, as losing a loved one’s money can make for awkward Thanksgivings.
State government, federal government and private foundations sometimes have grants that are applicable for new businesses. Those are often tied to metrics though, so be sure you’re not promising more than you can deliver when accepting these.
A great source of startup capital, SBA loans are subject to similar rules as traditional banking products. SBA loans typically only work for traditional businesses that are heavy on the equipment side (they don’t work well for paying salaries for example).
No matter the business you’re starting, you’ll probably use some personal savings to get it off the ground.
HOMESTAKE VENTURE Partners
Supporting broad-based economic strength and community resilience by directly supporting the growth of small and mid-sized businesses.
For many consumer products companies, crowdfunding can be an outstanding way to finance business startup costs. The capital is free from interest and doesn’t take an equity stake in your company, just make sure you deliver on your promises to your backers.
The best source of startup capital is revenue from the business you’re starting. While it doesn’t work for all businesses, there’s often a way to start small and finance the business by selling your product or service. For example, if you want to start a restaurant, it would be much cheaper to start a food truck first and use the revenue from that to ultimately start a restaurant. The other upside to financing a startup with revenue is that you’re forced to prove out the business model very early on.