The Complete Guide to Choosing a Startup Funding Model

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By Andrew Marder

Andrew Marder is a writer for Capterra. His background is in retail management, banking, and financial writing. When he’s not working, Andrew enjoys spending time with his son and playing board games of all stripes.

Knocking Down Doors

Smart start-up lessons for smart start-up people

Figuring out how to fund your business is almost as important as figuring out how to run your business. Changes in the financial landscape over the last decade have meant more options are open to startups for getting off the ground, while some classic options have taken a turn for the worse.

Specifically, bank lending has gone off the edge a bit. A report on The State of Small Business Lending by the Harvard Business School notes, “The share of small business loans of total bank loans was about 50 percent in 1995, but only about 30 percent in 2012.”

That’s been exacerbated by a consolidation among banks, with small, local banks and credit unions being snapped up by larger institutions. That gives entrepreneurs fewer bank lenders to approach.

Luckily, there are plenty of other traditional funding options still available – as we’ll see – and a handful of more contemporary options – as we will also see. Choosing the right option is all about understanding what your credit looks like, how much you need, how much you want to give up, and who you’re willing to be beholden to.

No company is going to end up using just one of these options. As your business grows, you’ll need new funding, find new ways to make partnerships, and get sick and tired of other funding options. I’m presenting these in rough chronological order based on when a typical business might turn to the given option.

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The Complete Guide to Choosing a Startup Funding Model

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