Sure College Students Are Entrepreneurial But Where Can They Get Funding? was originally published on College Recruiter.
There’s little doubt that Gen Y is entrepreneurial, especially the males. A lot of would be entrepreneurs of all ages figure that they just need a good idea and they’ll be successful. As someone who founded and runs CollegeRecruiter.com, I can assure you that success in the world of business requires a good idea but that a good idea is much less important than good execution.
But let’s leave the issue of good idea versus good execution aside for this blog article and instead focus on how to get funding. One of the key problems facing any start-up is how to get funding. There are several types of funding which are often used by start-ups:
- Angel Investors – Typically friends or family who provide funding at an early stage and can normally be relied upon not to force the entrepreneur to shut down if the venture fails to be a huge success within a few years. A stereotypical angel Investor would be a rich uncle who provides $50,000 in seed money and hopes to receive his money back plus a profit but isn’t going to litigate if he never sees a dime.
- Venture Capital – The amount of money from these investors tend to be larger but also early stage. They tend not to be friends and family and require big paybacks. They may invest in 20 ventures and be happy if they have huge success with only one of them. A problem for the entrepreneur is that the VC’s can often impose a lot of pressure on the venture and may even shut down a profitable venture because the payback isn’t going to be enough for the VC even if it is satisfactory to the entrepreneur.
- Funding – Start-ups can also receive funding from other sources such as bank loans, credit card debt, loans from friends and families, investment by active partners, etc.
There are likely dozens and perhaps hundreds of variations on these and other ways of funding start-ups. If you put 100 start-ups in a room you’ll probably find 100 different ways of funding a new venture. We were fortunate that our start-up capital requirements were fairly minimal so our funding has all been from cash flow and from the occasional short-term bank loan. Probably most start-ups self-fund like we did but most of the higher profile start-ups probably require the financing from angels, VC’s, or other outside sources.
