Startup Funding in North Carolina: 7 Ways to Finance Your New Business

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Good news: North Carolina entrepreneurs have choices when it comes to startup and small business financing

Most entrepreneurs will tell you that the most difficult part of building a business is raising money. Fortunately, there are now more options than ever for small businesses to seek outside resources.

If you’re a North Carolina entrepreneur and do not have enough savings to fund your business, you can draw on wide variety of state-based funding sources, from local crowdfunding platforms to state grants and regional loan programs. 

1. Crowdfunding

Crowdfunding is an excellent new way for small businesses to finance their activities. These platforms use information technology to match entrepreneurs with just the right investors. Crowdfunding can save you time and effort because you effectively create one business pitch for all prospective investors through your profile. The most popular crowdfunding platforms are Kickstarter and Indiegogo, as well as a large variety of platforms for different niches. Keep in mind that crowdfunding platforms vary greatly in their functionality, features, and requirements, so it is best to research which one most closely fits your own goals.

LocalStake NC is a North Carolina-based crowdfunding platform, allowing local businesses to raise capital from individuals within the state. When seeking investment via crowdfunding, be sure to stay aware of local regulations, as this is regulated at the state level.
      - Get more information on North Carolina’s crowdfunding regulations
      - Read more about crowdfunding in North Carolina

2. Strategic Partnerships

If other businesses and organizations have a stake in your success, why not have them help you fund it? If your business can create sales opportunities for others, they may be interested in helping to finance your growth by forming a strategic partnership. This is most feasible once your business is launched and you can credibly demonstrate the opportunity for prospective strategic partners. Strategic partners can be suppliers, vendors, and others with whom you share a common interest and benefit from alignment.
      - Read this comprehensive guide to forming strategic partnerships

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3. Bank Loans

Many businesses can qualify for loans from banks, given a good credit rating. Having some substantial assets might be necessary if it is a limited liability company. Banks will need to see your expenses and revenue to determine your eligibility. North Carolina’s First Bank has a program specifically for small businesses and startups (see here for details). First Bank also has a loan program geared for female entrepreneurs in the state.
      - Check out a list of the top small business lenders locally

4. Small Business Administration Loans

Even if you don’t qualify for regular bank loans, you may be able to obtain a Small Business Administration (SBA) loan from one of North Carolina’s qualified banks. The SBA Guarantee Program assists businesses that are unable to get funding elsewhere. For working capital loans, maturities can be up to 10 years, with a maximum of $5 million.
        - Here is a list of qualifying lenders in North Carolina

5. Private Equity

Private equity is a large industry geared towards investing in private businesses (i.e. not listed on a stock exchange). Private equity companies take an equity stake in your company in exchange for working capital that you can use to build your business. They will typically hold onto their position in your company for 4-7 years before they exit (typically by selling their position to another investor or back to you). In that period of time, they expect very high growth.

There are private equity investors focused on many different kinds of businesses. For example, venture capitalists are often focused on early-stage technology companies while others might be focused on later-stage consumer companies. North Carolina has a relatively small private equity industry, mostly located in Charlotte and Raleigh (see here for a list of firms). Nonetheless, if you feel your business is a good fit for private equity investment, don’t be shy to look out of state. Once you find private equity firms to target, you can contact them with an investment pitch.


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6. Angel Investors

Angel investment is technically a form of private equity but is usually focused on very early stage technology companies and functions differently from traditional private equity. Angel investment can be a great fit for innovation-focused companies that are positioned to grow extremely fast. Some of the biggest technology companies today, like Facebook and Google, were funded by angel investors.

One of the drawbacks of this is that you will need to give the investor equity in your company and, potentially, some leverage over decision-making. Therefore, it is critical that the angel investor’s approach aligns with your own vision and goal for the company. Keep in mind that Angel investment transactions must be registered with the Securities and Exchange Commission.

There are many North Carolina based angel investors that are looking to fund innovative North Carolina startups within the state.
      - Here is a comprehensive list of North Carolina angel investors.

7. Grants

Government agencies and charitable foundations offer grants (essentially free money) for businesses in a wide variety of niches. Typically, businesses that qualify for grants will need to offer some kind of ‘social good’. There are grant programs for research and development, environmental businesses, social services and childcare, and more.
     Here's a list of grant programs from the NC Chamber of Commerce

Funding a business is a struggle for all entrepreneurs. There are many different fundraising options depending on your business needs, industry, and type. The most successful entrepreneurs remain flexible in their fundraising tactics.

If you don’t succeed at procuring funds from a particular source, consider changing your approach and trying something new. Like many other businesses, you can seek a combination of the above funding resources over different phases of your growth.

Remember: If you have any specific questions about finding money for your business in Currituck County, you can always CALL LARRY.

2020 Hampton Roads Business Resource Guide 004

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