Financing Options and Support
for Funding Your Business
George McAllister
gmcallister@sbtdc.org
704-548-1090 ext. 3343
The SBTDC is a business advisory service of The University of North Carolina System
operated in partnership with the U.S. Small Business Administration.
sbtdc.org
Who is the SBTDC?
• Provides one-on-one confidential business
counseling in the areas of:
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Sales/Marketing
Human Resources
Operations
Financing
Government Procurement
Technology Development
Funded by the SBA and the University of NC System.
• 15 Offices across the state.
• UNC Charlotte office worked with over 800 clients in
2012.
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Agenda
• Getting ready to seek funding.
• Funding options for a startup.
• What the funding sources are looking
for.
• Area resources to assist you.
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Getting Ready
Good Science
does not equal
Good ROI
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Getting Ready
Learn how to “speak” business.
In the beginning don’t expect
funding sources to “speak”
science.
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Getting Ready
Not all money is created equal.
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Getting Ready
Be prepared
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Know what the funding source is looking for.
Know how much money you need to reach your goals.
Know what the money will be used for.
Have the documents needed. Business plan, cash flow
projections, etc.
How is your funding source going to
make the appropriate return?
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Types of Funding
• Debt: You have to pay back the money
borrowed.
• Equity: You do not have to pay back
the money you receive.
• Grants: You do not have to pay back
the money you receive.
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Your First Investor is ……
YOU
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Founder’s Money
The vast majority of founders
contribute personal funds, along
with sweat equity, to their
ventures.
• Sweat equity represents the value of the time
and effort that a founder puts into a new
venture.
• Valued more in equity deals rather than debt
deals.
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Angel Investors
• Friends, family and fools. More relationship
based verses the business model.
• Customers, suppliers and people in the
industry. They understand what you are doing.
Combination of relationship and business model.
• Professional angels. Focus on the business
model more than the relationship.
• Individuals
• Angel Funds: Organizations with a fund.
Imafcharlotte.com
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What Angels are looking for
• Rapidly growing company or business
model.
• A good Angel – Company match.
• Invests $10,000 to $1.5 million.
• Early stage returns 5 to 10x within 5-7
years. Or, 31% to 47% annual growth based
on 5 years.
• Competitive advantage.
• An exit strategy.
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Banks
• Historically, commercial banks have not
been viewed as a practical sources of
financing for start-up firms.
• This sentiment is not a knock against
banks; it is just that banks are risk adverse,
and financing start-ups is a risky business.
- Banks are interested in firms that have a strong cash flow, low
leverage, complete/accurate financials, good management,
and a healthy balance sheet.
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Bank Term Loan
• The borrower agrees to repay x amount of
dollars over x period of time at y % interest
rate.
• Loan proceeds can be used for almost
anything.
• Terms should reflect the useful life of items
purchased.
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Bank Line of Credit
• Borrower only pays interest on the amount of
the loan outstanding.
• The loan should be used only to finance short
term aspects of the company like inventory or
large orders.
• The loan has to be paid off within a 12 month
period before continuing with the loan.
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Five C’s of Credit
• Capacity – The business must be able to support its debts and
expenses, and be profitable.
• Capital – Money you or investors are putting in or equity you
already have in the business.
• Collateral – The value of assets that secure the loan.
• Character – of the borrower and guarantors.
• Conditions – The economy, industry trends, or anything that
will affect your business.
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Grant Funding
• Academic and for profit grant funding is
totally different.
• Niche oriented.
• Small amounts of money. Not enough to
start a company.
• Localized geographical area.
• Primarily for non-profits or local
governments.
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NC Idea Grant
• Innovative Development for Economic
Advancement (IDEA)
• For NC based high-tech start up companies
with high growth potential.
• Any stage but prefer after “Proof of Concept”
but before “First Institutional Funding”.
• Amount: Up to $50,000
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NC Idea Grant
• Two grant cycles per year: Earlier this March
and in the fall.
• Awarded 72 grants totaling over $2.7 million.
5-6 winners per cycle.
• Charlotte award winners
– InfoSense
– MailVU
– DealCloud
• ncidea.org
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Small Business Innovation Research Grant (SBIR)
• R&D technology the government wants.
• Solicitations from 11 Federal agencies.
• Eligible companies must have technical
expertise and infrastructure.
• Few companies qualify nationwide
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Small Business Innovation Research Grant (SBIR)
• Three Phases
– Phase 1: Evaluate viability and feasibility of an idea.
• Up to $150,000
– Phase 2: Expand results and further development.
• Up to $1,000,000
– Phase 3: Commercialization.
• Funded by some of the federal agencies; not SBIR program.
No set funding amount.
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Capital Opportunities for Small Businesses
• Online resource listing all funding resources
available to NC businesses including start
ups.
• 144 pages describing each funding source
with contact information.
• Updated on a regular basis.
• Go to sbdc.org
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Funding Support Resources
• UNC Charlotte’s Ventureprise
– Paul Wetenhall
704-548-9113
• UNC Charlotte’s Office of Technology
Transfer
– Carl Mahler II
704-687-8012
• UNC Charlotte’s SBTDC
– George McAllister
704-548-1090
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Financing Options and Support
for Funding Your Business
George McAllister
gmcallister@sbtdc.org
704-548-1090 ext. 3343
The SBTDC is a business advisory service of The University of North Carolina System
operated in partnership with the U.S. Small Business Administration.
sbtdc.org