Funding Options

A rundown of loans and banking options

Many companies use many or even all of these financing tools!

They should each be considered for what you need at that moment and what type of company you currently are.

 

Paths to Financing Your Outdoor Business Panel

 

Explore Financing Options Workshop

Bootstrapping

Not taking outside (usually VC) capital. Personally financing or funding your startup through sales.

Ways to do it:

  • Self Funding
  • Consulting or working full/part-time
  • Pre-selling your product
  • Crowdfunding
  • Service based product

Pros

  • Full control over your business board, exit, etc)
  • All “funding” coming from customer
  • Not forced to scale too quickly, not on a timeline
  • No liquidity event needed

Cons

  • Growth is slower (competition risk)
  • Difficult to finance deep technology or run your company at a loss
  • Can be a detriment to founder salary/wellbeing to “go it alone”
  • No structured expertise, guidance, accountability

Good for you if:

  • You have adequate personal savings or have a “dayjob”
  • You are comfortable with financial risk/personal debt
  • You have a low minimum viable product (MVP) set
  • You have low development or startup costs
  • You can grow/sell incrementally
 

Debt

Taking an investment with the agreement that you will pay it back in an agreed amount of time, with an agreed amount of interest.

Ways to do it:

  • Microloans / Small Business loans
  • Revenue Based Financing
  • Convertible Note
  • Venture Debt
  • Personal debt
  • Inventory Financing
  • Receivable Financing / Invoice Financing / Invoice Factoring
  • Line of Credit
 

Pros

  • No loss of ownership
  • No need for a liquidity event
  • Less pressure for 10x growth
  • If you have consistent cash flow, can be a “cheaper option”

Cons

  • Requires more consistent cash flow, further along
  • Can have more paperwork/diligence
  • Having to pay back too early can hurt the business growth
  • Less guidance/oversight provided
  • Have to pay it back!

Debt is Good for you if:

  • Need to buy physical assets
  • Have a proven small business model (restaurant, store)
  • Will be generating revenue quickly
  • Have good credit!

Go to list of alternative funding options

 

 

Grants / Prizes

Money that is given without the expectation of any return.

Ways to do it:

  • Foundations
  • Social Impact Funders and Accelerators
  • Government Agencies (SPIR Grants)
  • Pitch Competitions

Pros

  • It’s free!! Aka you do not have to give up ownership
  • Can fund non-scalable parts of the business or support a difficult market
  • Can have lengthy admission process
  • Frequently small sizes
  • Can have restricted use
  • Less oversight and support on business
  • Can cause you to pursue a non sustainable model
  • Many foundations will not consider businesses

Grants are good for you if:

  • You have a strong, measurable impact mission or story
  • You’re great at pitching
  • You have a specific aspect that can be powered by grants (training, education, scholarships)
  • You are getting accountability and expertise from other advisors
 

 

Early Equity - Angel

An investment where shares in the company are purchased

Angel investors: Individuals who invest their own money, very early, in exchange for equity (usually at a discount)

Ways to do it:

  • Friends and Family
  • Professional Angels
  • Angel Groups
  • Equity Crowdfunding
  • Accelerators
  • Pre-Seed Investors

Pros

  • Capital for growth
  • Aligned incentives - want to help you grow
  • No short term expectations on paying it off
  • Accountability

Cons

  • Need to have an exit / liquidity event
  • Give up ownership of your company
  • Some angels can be detrimental or distracting
  • Some founders feel this puts them on a path for VC
  • Many different term-sheets leads to difficulty raising in the future

Early Equity Investment - Right for you if:

  • You need capital to build your product before you can sell it
  • You are planning to grow your team and company much bigger
  • You are okay not owning your company indefinitely
  • You want more guidance and accountability

Go to List of outdoor investors

 

 

Equity - Institutional

Equity investment from professional investors with long-term growth potential.

Ways to do it:

  • Venture Capital firms
  • Corporate Venture Capital
  • Strategic Investors
  • Family Offices
  • Private Equity Funds

Pros

  • Can raise significant capital
  • Oversight on company
  • Firms have additional resources
  • Helps build brand for talent

Go to List of outdoor investors

Cons

  • Return expectations are high
  • More you raise, the fewer exit options you have
  • Can lead to prioritize growth

Did we miss something that could be useful? 👉 Let us know here!

 
 
 
 
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