CARTOONS BY CHRIS BRITT

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ACKNOWLEDGEMENTS Writing a book may sound like a very individual activity. This book was not. We had assistance from numerous people who helped research, review, edit, brainstorm and provide great examples of businesses that raised money in nontraditional ways for their startup. This book started out as 10 ways to finance your business. Every time we thought we were through, we discovered another example. We stopped at 27. At least that’s what the cover says as I write this acknowledgement. We probably could identify 50 ways to start a business and have Paul Simon write a song to go with it. We know we would not have been able to complete this endeavor if it had not been for the entrepreneurs, editors, reviewers and designers that provided their ideas and suggestions. Without going into great detail about what each of them has done, we would like to acknowledge the assistance of Michele Ko, Rachel Maxwell, Adam Forman, John Sechrest, Tricia Kovacs and Lisa Smith. I also want to thank Chris Britt for allowing us to use his cartoons that made the writing of this book more enjoyable and fun. A cartoon is definitely worth a 1,000 words when it comes to financing a startup. It helps make the entrepreneur understand the options they are getting and eases the frustration. And finally I want to particularly thank my Department of Commerce colleagues, Gretchen Schlomann and Robb Zerr, who not only have the experience of being entrepreneurial, but also making me a better writer. I am grateful for their intellectual support for both words and graphics in this book. It is an honor to work with them. 2
CONTENTS Bootstrapping. .......................... 7 Credit Unions . .......................... 9 Reward Crowdfunding . . . . . . . . . . . . . . . . . . . 11 Equity Crowdfunding . ....................15 Peer-to-Peer Lending ....................19 Community Sourced Capital . ............. 23 Prepaid Sales . ......................... 25 Angel Investors ........................ 27 Venture Capital .........................31 Local Investment Opportunity Network (LION). ....................... 35 Factoring ............................. 39 Home Equity . ..........................41 Partnerships . .......................... 45 Small Business Administration Loans ....... 49 Microloans ............................ 53 Retirement Accounts .................... 55 Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Vendor Financing .......................61 Leasing . .............................. 63 Grants . ............................... 65 Business Plan Competitions .............. 67 Farmer’s Markets ........................71 Lemonade Stand ....................... 75 Microenterprise Development ............ 79 Individual Development Accounts ..........81 Shark Tank ............................ 85 The Lottery . ........................... 89 3
Page 1 and 2: CARTOONS BY CHRIS BRITT
Page 3: STARTUP WISDOM 27 Strategies for Ra
Page 7 and 8: - INTRODUCTION - As an entrepreneur
Page 9 and 10: - BOOTSTRAPPING - Bootstrapping is
Page 11 and 12: - CREDIT UNIONS - While banks may b
Page 13 and 14: - REWARD CROWDFUNDING - Crowdfundin
Page 15 and 16: Momentum. The more backing and inve
Page 17 and 18: - EQUITY CROWDFUNDING - Congress pa
Page 19 and 20: DISADVANTAGES Resource intensive. A
Page 21 and 22: - PEER-TO-PEER LENDING - There are
Page 23 and 24: DISADVANTAGES The money isn’t gua
Page 25 and 26: - COMMUNITY SOURCED CAPITAL - The c
Page 27 and 28: - PREPAID SALES - With prepaid sale
Page 29 and 30: - ANGEL INVESTORS - A century ago,
Page 31 and 32: DISADVANTAGES Investor expectations
Page 33 and 34: - VENTURE CAPITAL - Venture capital
Page 35 and 36: DISADVANTAGES Give up control. The
Page 37 and 38: - LOCAL INVESTMENT OPPORTUNITY - NE
Page 39 and 40: DISADVANTAGES Private transactions
Page 41 and 42: - FACTORING - If your company has r
Page 43 and 44: - HOME EQUITY - This type of loan a
Page 45 and 46: DISADVANTAGES Loss of assets. If yo
Page 47 and 48: - PARTNERSHIPS - Partnerships lever
Page 49 and 50: PARTNERSHIPS EXAMPLE Jacob and Sylv
Page 51 and 52: - SMALL BUSINESS ADMINISTRATION - L
Page 53 and 54: DISADVANTAGES Time consuming. On av
Page 55 and 56:
- MICROLOANS - In the banking indus
Page 57 and 58:
- RETIREMENT ACCOUNTS - If you’re
Page 59 and 60:
- LIFE INSURANCE - Life Insurance c
Page 61 and 62:
LIFE INSURANCE EXAMPLE Home economi
Page 63 and 64:
- VENDOR FINANCING - If your compan
Page 65 and 66:
- LEASING - Equipment can suck up c
Page 67 and 68:
- GRANTS - A grant is money that is
Page 69 and 70:
- BUSINESS PLAN COMPETITIONS - If y
Page 71 and 72:
BUSINESS PLAN COMPETITION EXAMPLE E
Page 73 and 74:
- “FARMER’S” MARKETS - These
Page 75 and 76:
FARMER’S MARKET EXAMPLE CB’s Nu
Page 77 and 78:
- LEMONADE STAND - Don’t laugh. S
Page 79 and 80:
DISADVANTAGES Bad weather. One thin
Page 81 and 82:
- MICROENTERPRISE DEVELOPMENT - Des
Page 83 and 84:
- INDIVIDUAL DEVELOPMENT ACCOUNTS -
Page 85 and 86:
Not available everywhere. IDAs aren
Page 87 and 88:
- SHARK TANK - Okay, so we made fun
Page 89 and 90:
DISADVANTAGES Be prepared. The shar
Page 91 and 92:
- THE LOTTERY - Sure you could play
Page 93 and 94:
AUTHORS AND ARTIST Maury Forman is
Page 96:
Startup Wisdom Reviews . . . If you
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CARTOONS BY CHRIS BRITT

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