Scandia Partners is a family office dedicated to investing in and growing our partner businesses. We wanted to put together some ideas as you sort through various types of business funding offers. First, let’s recap some of the type of funding out there for your business.
Loans can be an easy way to secure funding for your business. In addition to private business loans, you can secure business lines of credit as well. SBA Loans or Small Business Administration loans can be a big help as you start your business. These are generally location-based and offered to spur economic development in certain areas. SBA loans can be a great option because the interest rates can be lower than the private market, with higher possible loan amounts.
Grants are generally not the biggest source of funding you’ll find, though they can provide supplemental funding for your business. Make sure you understand the terms of accepting any grants and whether those grants include any particular building improvements, etc.
Chances are, you’ve heard about this type of funding. It’s a great option for many businesses. You pitch your idea and a firm is willing to take a chance to invest.
Family offices generally manage the investments of high net worth individuals and invest in businesses with which their values align. Mission and goals are just as important as profits and bottom-line.
When you start to think about the different ways to fund your business, keep in mind the following:
- Mission Statement & Vision: Does your mission statement and vision align with a Family Office more than a VC firm? Could a VC firm reject parts of your mission statement/vision?
- Plan for profitability: Make sure you have a plan for profitability. Where will you be in 1 year, 2 years, 5 years, etc? If your plan for profitability will not return a profit fast enough for VC firms, you might want to consider alternatives like loans or a family office.
- Expertise: Are you looking for a partner that cares more about dollars and cents? Family Offices can generally provide mentorship and expertise based on the types of businesses they have worked with in the past. It’s something that VC’s generally don’t provide.
If you want to learn more about what it’s like to work with a Family Office when it comes to seeking business funding, reach out to Scandia Partners.