Sources of Capital for Small Business Startups

Business startups, regardless of industry, have one thing in common. They all need funding. Coming up with the necessary capital from traditional resources is more difficult than in times past – especially for startups.

Fortunately, there are a few other resources available to help you get the capital you need to get your startup off the ground.


This term is used to describe the process of starting a business with very little capital. It often requires operating on a shoestring and pouring every bit of return back into the business.

It’s a slow building process that often limits the speed at which you can grow your business. It is, however, perfectly viable.Business Insider lists some impressive bootstrapping success stories including names like TechCrunch, Gawker, Braintree, and Indeed.


While for some it’s little more than a buzzword, there is reason behind the buzz surrounding crowdfunding. This innovative method of funding businesses is handled in two ways.

One is a rewards-based method where contributors help fund projects in order to receive a reward for doing so.Kickstarter is one of the most popular of these venues with high profile ventures such as the Veronica Mars movie project and GoldieBLox.

The other method is simply crowdfund investing. With this method of funding, many individuals invest small amounts of money to help fund startups. This way no one person carries the brunt of the risk.

Venture Capitalist

While not the most common lenders for startups, as most venture capitalists are interested in businesses that already have a record of success this group of investors are worth considering.

What are they looking for in an investment? Venture capitalists can provide significant sources of funding for startups that can show explosive potential for growth, an exceptionally talented group of people at the helm, and products or services that are revolutionary.


Angels do exist – at least in the world of startup investors. These are people who have funds but want to grow them at a better rate than they can expect through traditional methods.

Angels often prefer to invest close to home so set your sights locally. This method does require a little networking on your part in order to catch the eye of angel investors.

Bank Loans

While banks are notoriously tight-fisted after recent economic woes, they are once again beginning to open coffers to small businesses.

Banks offer a little more flexibility than other sources, such as venture capitalist, when it comes to repayment. However, banks want security, in the form of assets, and proof that you can repay the loan before they’re willing to lend.

No matter what kind of source you use to fund your business startup, it’s important to protect your investment by making a further investment in business insurance. Business insurance for startups is not a luxury – it’s an absolute necessity.