Where is the capital for startups? A view of the funding landscape in WNC:
Chris Grasinger, Mountain Bizworks High Country Regional Manager
As many of us know, successfully launching a business takes an immense amount of energy on the front end. Research and development, building your team, creating a minimum viable product, crafting a marketing strategy – all of these elements take time and hard work. There are an infinite amount of road maps and influencers that are telling you how to reach launch, but sorting through different strategies and advice can push you to capacity as well. All the while you have to keep cash flowing into your household and paying for your own personal bills. You can peak 14 hour days pretty quickly if you are not effectively prioritizing your actions.
In many cases, your business will reach a stage where you have to find money to launch or grow the business to a desired point. There are many triggers that can lead to this moment - whether that is finally paying the people doing the work, buying a crucial piece of equipment, or hiring a developer to build the software you need. So where does this capital come from?
Self-funding or Bootstrapping –
Sourcing funds from savings of the founders or pulling the needed capital from your own excess cash that the business is generating.
Friends & Family –
This source of capital is just what it sounds like. Sometimes you may receive money from folks within your natural network as a donation or maybe it will come with certain terms. A word of caution is to always be very clear on the expectations of all parties with this type of funding – you don’t want to get to a point of misunderstanding that could taint a relationship with someone close to you.
Angel Investment –
Angel investment can come in a number of forms but is typically defined as an individual or group of individuals that make early investments into companies, to fund the startup or early growth stages. An angel investor could actually be someone in your friend or family network. A new angel investment group specifically serving our area is the High Country Impact Fund. This group was formed to invest in entrepreneurs and companies, with high growth and local economic impact potential.
Traditional Debt Capital -
These are the traditional lenders that we all know, such as Wells Fargo, First Citizens or BB&T. Many of these banks have excellent services for startup businesses, such as checking and mobile deposit. But they oftentimes lack the ability to fund a startup, due to federal regulations and risk grade.
Alternative Debt Capital –
There are a number of different types of lending institutions that are designed to make high risk loans. A localized version of this type of lender is Mountain Bizworks - a community development financial institution, focused on funding Western North Carolina startups and existing businesses.