January 29, 2010

FundingUniverse’s Brock Blake Published on UtahBusiness.com

Here are some highlights from an article that was published in UtahBusiness Magazine, featuring our very own Brock Blake:logo

Cash Strapped? Funding Options for Today’s Small Businesses

by Brock Blake – 29 January 2010

There are a variety of sources today for business owners to locate capital to fund and grow their businesses.  Contrary to popular belief, it is not a matter of having venture-backed funding or nothing at all. Rather, small business owners should consider the following possibilities:

Self Funding

Funding Range: Varies

Most people starting a business prefer to rely on their own resources. They don’t want to depend on others—or on any form of debt—to begin building their dream. Initial funding may come from personal savings, retirement accounts or home equity lines of credit.

Friends and Family

Funding Range: Varies

Before you approach outside capital, consider approaching friends and family members to get the ball rolling. When you do, appropriately document the transaction as a loan, an investment or a gift—doing so will save you a lot of headache down the road.

SBA Express Loans

Funding Range: $5,000 – $25,000

Small Business Administration (SBA) loan programs help qualified businesses obtain financing through a lender that provides the actual loan to the borrower. The SBA guarantees a portion of the loan (between 50 to 90 percent depending on the program) acting much like a co-signer. The primary benefit of a small loan is that a business owner does not have to give up additional ownership that often comes with angel or venture funding. The downside, of course, is the limited range, in dollar terms, of funding through SBA loans.

Angel Investors

Funding Range: $25,000 – $1 million

An angel investor is a well-off individual who has some type of business background, such as a former executive or successful entrepreneur. Investing their own money, angel investors have different motivations than just purely a return on investment (ROI). Typically the majority of angel investors don’t want to own more than 50 percent (or a controlling interest) of the company. Angel investors usually want to take between 15 to 40 percent ownership in the company. This enables them to provide support, key introductions and board-level feedback. Because an angel investor is becoming a minority owner, it is critical for an early stage company to focus on partnering with the right people who share similar goals with the company.

Venture Capital

Funding Range: $1 – $10 million

Venture capitalists raise money from several institutions and individuals, and try to provide them a financial return by investing in multiple companies. Like the angel investor, a venture capitalist will want to have a clear exit strategy for their investment. While venture capitalists are highly ROI focused, their funds often have certain parameters that may or may not preclude them from investing in a particular company. A “no” from a venture capital fund may not mean a business is a bad investment, but that the company simply didn’t fit into the fund’s investing criteria.

Grow Your Business

As a company moves from idea to operation, it is going to need cash. Wise entrepreneurs carefully consider the risks and benefits of each funding strategy and how those risks and benefits align with their personal and corporate goals. Once an early-stage company has a clear understanding of what risks it is willing to take, it is in the best position to pursue one or a combination of funding sources that best meet the needs of its growing business.

Brock Blake is the CEO of FundingUniverse, Inc, a company that creates a platform to help a network of more than 1,000 active venture capitalists, angel investors and lenders connect with qualified investment opportunities. Brock can be reached at brock@fundingunvierse.com.

See the original article HERE




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