Different Types of Business Funding

If you’re thinking about funding your next venture or indeed if it’s your very first business venture you’re trying to get off the ground, there are different types of funding options you can look at. Which one you ultimately go with will naturally depend on a number of factors, most notably perhaps the funding availability along with the nature of the venture you want to get off the ground.

Bootstrapping

I would have added self-funding by way of a founder’s capital injection to the list, but that is perhaps implied as part of bootstrapping. Pure bootstrapping is perhaps something that subsequently doesn’t truly exist because of the capital which is required to get a start-up off the ground and running. Nevertheless, bootstrapping entails bringing in individuals to form part of your team of people who have the technical skills required to get the venture off the ground, except they don’t get paid in the traditional sense, but are rather offered a stake in the potential future profits of the venture.

If you’re a programmer for example you can perhaps do all the coding for your web based venture yourself.

Grants

Grants come in many different forms and sizes, but they’re perhaps even better than bootstrapping because you can then spend some of the money you get on essential aspects of getting the venture off the ground. Grants are great because you effectively don’t have to pay them back, but the exact terms depend on the agreement between the funder and the founder(s).

R&D

Research & Development R&D funding perhaps falls under grants, but I find it pertinent to discuss it separately because the money you get as part of a Research & Development grant is for a specific purpose and usually won’t be given to a start-up venture. Usually a business which is already well-established qualifies to apply for R&D funding and if it does get funded it would be for a specific project and not to get the business off the ground.

Governments usually offer R&D funding and usually it’s for a solution which aims to solve a problem which the government seeks to deploy to the aid of the public.

Business Loans

We’re perhaps getting into familiar territory now with business loans making for one of the most common ways businesses are funded. It’s probably not one of the best though because you’ll have to pay the money back with interest and you’ll probably have to attach some surety in addition to coming up with a business plan that will convince the stiff suites within the rigid and often backward banking industry of its viability (of its safety, actually).

Crowd-Funding

Crowd-funding via platforms such as Kickstarter is another great way to get your venture off the ground and it’s also very much like getting a grant, except you have to convince a lot of different people to each donate a little bit of money to your venture, but they probably wouldn’t be expecting any direct return on investment in return.

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