Financing Options For Startups

Posted on by Fred Wilson & Jason Li

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I got a bunch of great suggestions in my kickoff post on this topic last week. Based on that feedback, the series is going to look like this:

  1. Friends and Family
  2. Contests/Prizes/Accelerator Programs
  3. Government Grants
  4. Customer Financing
  5. Vendor Financing
  6. Convertible Debt
  7. Preferred Stock
  8. Venture Debt
  9. Capital Equipment Loans & Leases
  10. Bridge Loans
  11. Working Capital Financing

This list is roughly in chronological order of how a small company might avail itself of the various financing options, but there are always exceptions. Starting a company is more art than science.

I want to do each financing option as its own dedicated post so I’m not going to start today. I will start next week with friends and family.

If you are looking for some meaty MBA Monday reading this week, I point you to Brad Feld and Jason Mendelson’s awesome venture capital term sheet series, which is required reading for anyone seeking to raise venture capital.

 

From the comments

Wil Schroter added:

Fred, with so much emphasis on angel and venture funding, I think most people forget that 99% of companies will receive neither and seem to get by just fine.  This may be captured within a different category, but traditional bank financing, SBA Loans, Microloans, etc. are also part of the picture.

Also, I’m glad you added customer financing since I’d argue it’s the most valuable.

 

This article was originally written on May 23, 2011 by Fred Wilson here.