Types of Funding

Businesses need money to get started.  Whether the money is used to purchase supplies to make products, hosting for a website, or technology to delivery a service, money is vital.  There are several different ways to get this money, called funding models.  Each way has pros and cons.

  • Investment – People giving your business money in exchange for part ownership and control (called equity).
  • Loan – Debt capital that you get from a bank. The bank will let you use the money for a specific amount of time if you agree to pay them back with interest (extra money on top of what they gave you).  Check out an option for youth businesses here.
  • Crowd Funding – Lots of people pledge money through different websites to a business campaign for something in return, like a version of the product.  A popular version of crowd funding is through Kickstarter.
  • Bootstrap – Using your personal assets to start your business. Often this involves reducing start-up cost, and trying to start making money as soon as possible.

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