Back in the bad old days, financing a startup meant you were looking at some slim pickings for a source of funding: a traditional bank, your savings account, a wealthy benefactor in your corner, or if you were really lucky, perhaps your parents’ savings account.
The modern financing world for startups looks like the Wild West, comparatively speaking.
As dynamic and diffuse as financing has become, you still need to know the ins and outs of all of the options you have in front of you.
That’s why My StartUp is dedicating the month of October to a variety of financing possibilities to help you broaden your horizons. Although your stodgy neighbourhood banker may not have much time for your financing needs, the good news is that the new economy is a startup’s best friend when it comes to financing options.
No two startups are alike, so your approach to financing should account for your unique situation. Let’s give our October theme an early start by generating some questions that will help frame the issue and focus your financing mindset:
- How long have you been in business?
- How far along are you with your business model?
- How important is cash flow right now?
- Have you built up a substantial user base?
- Have you gone through a scalability exercise?
- Are you willing to part with equity in your startup in exchange for funding?
- Have you pitched for funding previously?
- What are your specific expectations for fundraising?
- Is this a need or a want (i.e., are you sure this is the right time to seek additional financing)?
We’ll open the month with a look at crowd-funding, including a breakdown of options for Canadian startups, current trends, regulations, and a few pointers that may lead you towards a successful crowd-funding outcome.
My StartUp will also delve into angel investing: how important this funding stream has become for start-ups and details on where angel investors can connect with entrepreneurs. There may be a wealthy individual out there willing to contribute capital to your startup in exchange for equity or convertible debt. Depending on the stage of growth of your startup, angel investors might be the way to go.
What about some tried and true approaches to startup financing? There are always non-traditional banking sources of funding, such as the Business Development Bank of Canada. Some traditional banks, while usually risk averse and conservative, have opened specific lending arms focused on small businesses. Other banking institutions, especially credit unions, have initiated micro-financing. Futurpreneur is one of the better-known Canadian organizations providing funding for start-ups, and they will outline what entrepreneurs should keep in mind as they prepare a request for funding from a non-traditional source of financing.
Finally, My StartUp will round out the month with a feature showcasing Enterprise Toronto’s Starter Company, which is a city-backed venture that connects entrepreneurs with funding and resources.
If obtaining a source of financing for your startup is something you’ve been thinking about, be sure to visit My StartUp throughout October for a valuable cross-section of the various funding options at your disposal.