Friday, June 15, 2007

25 Alternatives To Venture Capital

Houston-based entrepreneur Rich McIver of BizNiche Ltd., a search-engine optimization company, has started a blog on small business financing at Not all the information applies to Canada, but most of it is pertinent to cash-strapped entrepreneurs anywhere.

His latest post is on The Top 25 Alternatives To Venture Capital .

Nothing radically new here, but it’s a great summary of different approaches entrepreneurs can take to finance their businesses that don't require them to go hat in hand to demanding venture capitalists.

Here are the alternatives that McIver outlines:

* Angel Investorss, Private Placement, Initial Public Offering, Bootstrap Financing (including Factoring, Trade Credit, Customer financing, and Leasing).

* Fund From Operations; Licensing; Launch Customers (customers willing to fund R&D in exchange for product rights);Vendor Financing, Sweat Equity (by others); Self Funding.

* SBA Loans; SBIR and STTR Programs; State Funding (these three probably not applicable to Canadian entrepreneurs); Home Equity Loans; Community Banks (probably equivalent to our credit unions).

* Microloans, Finance Debt (financing your equipment, facilities and receivables to up cash in the short term), Silent Partner, Friends and Family (click here to see an article I edited on this topic earlier this year).

* Form A Strategic Alliance; Sell Some Assets; Business Lines of Credit; Personal Credit Cards; Business Credit Cards.

I would add a few more sources to this list: getting more leverage at the bank by mortgaging your home, offering personal guarantees, or playing two or more banks against each other; going public through the Toronto Venture Exchange's capital pool program; venture debt; subordinated debt; asset-based financing; export insurance; innovative financing through BDC; borrowing against anticipated SRED credits; startup financing through the Canadian Youth Business Foundation (for "youngsters" up to age 35).

To read Rich’s full report, click here.

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