Funding 101

 
 

Are you an entrepreneur looking for ways to fund your startup? Samaipata investment team briefly outlines the top sources of startup funding. If you want to learn more, check out blog on everything tech, venture capital and startups or get in touch to send us your deck.

1. Bootstrapping

The first source of startup funding is bootstrapping, it means funding your startup with your own funds, which shows commitment to future investors but is not always enough to grow the business. Hence, it’s most seen in very very early stage businesses.

2. Family, Friends & Fools (FFF)

Typically first money in, some call it love money :-).

3. Business angels

Individuals who invest their own money in startups in exchange for an equity stake. Ideally, as they usually invest in very early stages, they provide founders with value-adding advice on the business.

4. Venture Capital

One of the most common sources of startup funding. Funds from institutional tech investors, like Samaipata, in exchange of an equity stake. There are different kinds of VCs by stage (pre-seed to growth) and/or focus (generalists, thematic). VC funds - also known as smart money - do not only provide funds but also bring to the table the relevant know-how on the business and their network. See here for more on VC and check out our post on Samaipata 101 to understand our investment thesis criteria.

5. Crowdfunding

Crowdfunding puts together the investment of small amounts of capital from a large number of individuals, expanding the pool of potential investors. There are different types of crowdfunding depending on what investors get in return of their money: reward-based, equity-based.

6. Startup loans and grants

These can come in the form of bank loans or government grants for startups. Access to bank loans will depend on your stage, business model and financials. There’s also specialized debt funding for startups, known as venture debt. Government grants have certain requirements businesses need to comply with in order to be eligible.

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