Funding Your Business

  • Bespoke Business Development - Learning Center Produced by the Office of Entrepreneurship Education

Fund Your Business

Overview

Every business needs funding to get off the ground. Choosing the right funding strategy will impact how you launch, operate, and grow your business. This course will walk you through available funding options—from self-financing and loans to investors and government-backed programs—so you can make an informed decision that aligns with your vision and risk tolerance.

Course Topics

This course is organized into six funding categories:

  1. Determine Your Funding Needs

  2. Self-Funding (Bootstrapping)

  3. Venture Capital & Angel Investment

  4. Crowdfunding

  5. Small Business Loans

  6. SBA-Backed Investment Programs

1. Determine Your Funding Needs

No two businesses require the same capital. To determine how much you’ll need:

  • Develop a startup budget

  • Consider one-time and recurring expenses

  • Include permits, licenses, marketing, product development, staffing, inventory, etc.

  • Use financial projections to map expenses for the next 12–36 months

Once you’ve calculated the total, explore funding methods that match your business model and growth expectations.

2. Self-Funding (Bootstrapping)

Leverage your personal finances to fund the business:

Sources may include:

  • Savings accounts

  • Retirement accounts (with caution)

  • Personal credit cards

  • Loans from family or friends

Advantages:

  • Full control over the business

  • No external interference in decision-making

Risks:

  • You absorb all financial loss

  • Tapping into retirement accounts may incur fees and penalties

  • Personal relationships could be strained if borrowing from loved ones

Tip: Always consult a financial advisor before using retirement or high-risk personal assets.

3. Venture Capital & Angel Investment

What is it?
Venture capital involves securing large-scale investment in exchange for equity and often a seat on your board. Angel investors operate similarly, typically at earlier stages.

Key Features:

  • High-risk, high-reward for investors

  • No repayment (unlike loans)

  • Loss of partial control and ownership

Ideal for:

  • High-growth startups

  • Businesses in tech, biotech, innovation sectors

Steps to Secure Venture Capital

  1. Identify Investors: Research angel investors or VC firms with experience in your industry.

  2. Submit Your Business Plan: Must show scalability, market opportunity, and strong leadership.

  3. Due Diligence: Investors evaluate your team, model, finances, and legal docs.

  4. Negotiate Terms: You’ll agree on valuation, equity, board roles, and rights.

  5. Secure Funding in Rounds: Investment is usually staggered based on milestone achievements.

4. Crowdfunding

Raise capital by collecting small contributions from many people via platforms like Kickstarter, Indiegogo, or GoFundMe.

How it works:

  • You pitch your business online

  • Backers contribute funds

  • In return, they receive perks (e.g., early product access, merch), not equity

Advantages:

  • Retain 100% ownership

  • Low financial risk if goals aren’t met

  • Built-in marketing and customer validation

Considerations:

  • Success requires significant marketing

  • Each platform has unique rules and fees

  • If goals aren’t met, funds may not be released (platform-dependent)

5. Small Business Loans

Maintain full ownership while accessing capital from lenders.

To increase approval chances, prepare:

  • A detailed business plan

  • Expense breakdown

  • 3–5 years of financial projections

Loan Sources:

  • Commercial banks

  • Credit unions

  • Online lenders

  • Community banks

Tips:

  • Compare interest rates, repayment terms, and collateral requirements

  • Use tools like Lender Match to connect with lenders offering SBA-guaranteed loans if traditional funding is unavailable

6. SBA-Backed Investment Programs

If you’re not eligible for traditional loans or investments, SBA programs can help bridge the gap:

Small Business Investment Company (SBIC)

  • Privately operated, SBA-licensed firms

  • Invest in qualified small businesses using their own capital + SBA-backed funds

  • Provide both debt and equity funding

Small Business Innovation Research (SBIR)

  • Competitive grants for R&D-focused companies

  • Encourages commercialization of innovations

  • Primarily for high-tech and science-driven startups

Small Business Technology Transfer (STTR)

  • Like SBIR, but requires collaboration with a nonprofit research institution

  • Supports early-stage innovation and product development

Summary

Funding affects everything—from control and ownership to long-term viability. You’ve now reviewed:

  • How to calculate funding needs

  • Self-funding benefits and risks

  • Equity-based funding (VC and Angel)

  • Public-based funding (Crowdfunding)

  • Traditional and SBA-guaranteed loan options

  • Federal innovation investment programs

Next Steps

Step 1 – Build Your Financial Roadmap
Estimate costs, choose funding method(s), and assess risk tolerance.

Step 2 – Prepare Documentation
Business plan, pitch deck, financials, and legal paperwork.

Step 3 – Apply or Launch
Reach out to investors, apply for loans, or launch a crowdfunding campaign.

Step 4 – Track and Optimize
Monitor cash flow, report to investors/lenders, and prepare for future funding rounds.

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