Times change, and that change has reached into financing business growth. As a business owner who has knocked on venture capital doors from Sand Hill Road in the Bay Area to New York City, as well as meeting with banks, angel investors, and also friends and family, I speak from personal experience when I say that growing a business with outside capital is hard work, and more often than not, met with a lot of rejection. Been there and done that. Bootstrapping a business is the way most small businesses grow, and for multiple good reasons. That said, times have changed and there are amazing new opportunities to access growth capital for your operation, both for-profit, and non-profit.
It’s not long after you enter the world of federal, state, and foundation based grants that you will more than likely run into the crowdfunding industry. There are more than 1,500 crowdfunds available, and we see a fairly normal distribution model where a few make up the bulk of the action. Fundamentally, there are two kinds of crowd funds- the donor based crowd funds, and the SEC regulated crowd funds. They are very different entities, with different rules, motivations, and outcomes.
If your small operation is non-profit, the donor based crowd funding may be a good thing for you. Donors are often looking for an early version of your product, or access to your performance if in the entertainment industry. If your operation is a for-profit small business, you may want to take a good look at crowd funds provided through accredited investors (look it up). You can raise up to $5 million every twelve months with what is called Regulation CF funding, and do so for a relatively small amount of time, equity and cost.
After receipt of funds, you typically need to provide two annual reports on how the funds were used, after your operation passes through some fairly lightweight background checks called “bad actor” checks. You’ll need to have your ducks in a row regarding your accounting and record keeping, you’ll need a “pitch deck” which summarizes your operation and how you’ll make a difference in the world of business. You can google who provides Reg CF crowd funding, or you can use a scout like Grants For You, (which of course I recommend).
The reality of a grant is that they can take six to nine months to land. A crowd fund can deliver some, most, or possibly all of your funding needs in approximately five to six weeks. I generally recommend a strategy with both types of growth funding.
Visit our webpage at grantsforyou.org or call us at 469-744-0272. We’d love to hear your story and custom craft a grants and crowd funding program for you.
Warm Regards,
Neil Reid.