Finding the right pot of funding can make or break a fledgling business. How do you know which is right for you?
The Newfoundland Salt Company recently won the 2019 $50,000 Molson Partnership, a corporate competition that’s just one of many potential funders available to Atlantic Canadian entrepreneurs. The challenge is deciding which is best for your business idea. Here’s an overview of startup funding, from the usual suspects to emerging options.
There are a number of federal and provincial government programs that provide would-be entrepreneurs with loans and grants (sorry, you’ll have to do that research for yourself).
CONS: Some programs require EI eligibility. Others are restricted by age, region or industry. And it can be hard to track down the many programs available across multiple departments and governments. A one-stop portal would be helpful (hint, hint).
A bank or credit union is still a good option for many startups.
CONS: Loans must be repaid, and approval can sometimes be difficult.
Put your life savings into your startup? It’s an option, but a risky one.
CONS: You lose your financial buffer, and could lose it all for good if the business fails.
Many businesses are launched with money from family or friends.
CONS: Mixing family and money can be problematic.
Starting your business with plastic doesn’t require applying for new credit.
CONS: Interest rates are high compared to a loan or line of credit.
Startups have successfully raised money through Kickstarter or Indiegogo.
CONS: You might not get the money you want, and you lose a percentage to the platform.
Some of the corporate prizes for entrepreneurs, like the $100,000 Telus Pitch contest, are hefty.
CONS: There are only a few winners for each prize—and the application process can be time-consuming (for potentially no reward).
Angel investors and VCs can be a great source for the cash needed to get a business off the ground.
CONS: A high rate of return is expected, and working with them usually means giving up equity.