We often speak to companies that are earlier stage, and they ask us, are we too small for funding?  The reality is that there are very few companies that are too small for funding. We’ve made a strong effort over the years to get to know a variety of different types of capital sources, so we can provide all of our clients with options when it comes to capital partners, regardless of the company’s size.

We’ve laid out below a number of different funding options for smaller companies based on a company’s size.

To learn about the funding options for larger companies, take a look at our free report: Funding Your Company: Finding the Right Partners.

Investors in Seed/Angel Stage companies invest based on the belief that the management has the ability to create and grow the company to be something great. Seed/Angel investors expect a very large return on their investments as the company grows.

Family & Friends

Friends and Family are great sources of funding when other sources are less readily available. It is important to make sure that Friends and Family investors understand the risk of investing in Seed/Angel Stage companies.

Crowdfunding

Crowdfunding allows a Seed/Angel Stage company to raise capital from unaccredited investors. As we previously mentioned, Crowdfunding can cause problems later on, and when possible, non-equity crowdfunding such as product-based crowdfunding should be considered.

Venture Capital

There are all kinds of Venture Capital firms. Generally, an investment from a Venture Capital investor is more structured than investment from an Angel Investor. While most Venture Capital firms prefer to invest in companies with revenue, there are a large number of Venture Capital firms which will fund pre- revenue companies

Small Family Offices

Small Family Offices are similar to Angel Investors with regard to Seed/Angel Stage companies. Many Small Family Offices, however, prefer to invest in companies with a planned exit in the foreseeable future, whether it is an acquisition or public offering.

Angel Investors

Angel Investors invest in Seed/Angel Stage companies. Angel Investors generally look for very early companies that have the ability to provide them with an exponential return on their investment.

Investors in Early Stage companies have a similar mindset to that of investors in Seed/Angel Stage companies, however, they expect to have more successes out of their portfolio companies. As a result of the company’s revenue, visibility on revenue, or a commercial viable product/service, the pool of potential funding sources increases.

Venture Capital

Early Stage companies are the focus of a large percentage of Venture Capital firms. From their perspective, the company has proven itself by creating a commercially viable product or service, or has generated revenue.

Small Family Offices

Small Family Offices are more likely to invest in Early Stage companies than in Seed/Angel Stage companies, due to lower perceived risk.

Small Investment Banks

If a business has the potential to scale and expand greatly, an Investment Bank may have an interest in raising funds for the company. Most Investment Banks prefer to work with later stage companies, however, there are many that prefer to work with emerging growth companies.