- “Friends and Family” –many startups get their first funding from their inner circle of friends and family – the people most likely to believe in them and their future success.
- Angel Investors – individual investors who will invest $25,000 to $250,000, it is often more practical and efficient to approach one of the many angel networks in California, unless you have an existing relationship with an Angel Investor.
- Venture Capital Firms- these firms manage the money invested in them by institutional investors. They generally are interested in very specific market sectors, companies at a particular stage of development and invest larger amounts of money.
- Debt Financing – loans or lines of credit that can be acquired primarily from banks, they usually must be secured by existing assets.
- Government grants – small business grants from the US government or state governments, this funding is non-dilutive (you do not need to give up any equity!), but requires quite a bit of administrative work to manage.
- Grants from Charitable Foundations – usually only for disease-specific research, the process for acquiring and managing these grants is often easier than the processes of some of the other sources of funding.
- Corporate partners/investors – large corporations often partner with startups to explore riskier parts of the market or new, cutting edge technology. These corporations can be good partners and will often consider investing in their smaller partners.
Keep in mind, however, that every source of funding comes with some obligations and requirements and many require giving up some ownership and control of your company. If possible, it is always best to “bootstrap” – self funding from the savings of the startup’s founders and early revenue streams. This is not always practical or possible, but worth considering.