The number one question we get from startups is, “how do I get funded?!” In general, we’re strong supporters of fundraising on the back of customer letters of intent, followed by bootstrapping, and a friends-and-family round.
Still, that might not always be enough. To get business funding for your Lansing startup, try these 5 options to help you hit your next milestone.
Business Accelerator Fund
The Business Accelerator Fund provides funding to early stage startups in Michigan. Managed by the Michigan Small Business & Technology Development Center, this fund makes available up to $50,000 in funds for companies whose competitive edge is technology. Some examples of these types of businesses are; Advanced Automotive, Manufacturing, Materials, Alternative Energy, Homeland Security and Defense, Life Sciences, and Medical. As with most funding options provided by the state, special consideration is given to highly scalable, patent protected (or protectable) intellectual property, and those that can gain high investments and create jobs.
First Customer Program:
Most startups die because they can’t get traction with customers.
The First Customer Program, run through the University of Michigan, helps reduce that probability by helping companies identify their most likely first customer through a series of action steps and research. Additionally, this program can help with gaining introductions and closing sales. Finally, the First Customer Program provides matching funds to help implement the steps proposed in the action plan they put together.
The pre-seed Microloan is a loan program through the Michigan Economic Development Corporation (MEDC) which allows a company to borrow up to $50,000 for working capital.
Candidates for this loan can be pre-revenue and may or may not have raised any outside funding. The terms are fairly standard (roughy prime + 1.8%).
Venture Capital Fund:
The venture fund lets the money you’ve raised go further.
Designed for startups that have raised money from private investors, the Venture Capital Fund provides matching funds (up to $250,000) against the outside money you’ve raised. This is not a loan program. However, this fund does take an equity stake in the company, usually along the same terms (e.g., valuation) as the outside investor.
To be eligible for the funding, the startup has to have been attractive enough to outside investors, that they invested in it. This generally means it must be a scalable, protectable startup.
MSU Federal Credit Union Startup Loan:
An innovative product in its own right, the MSUFCU Startup Loan provides credit to a startup to launch their business.
Like other loans, they require an application process and credit approval, but, if approved can provide up to $15,000 of unsecured capital to the startup. Rates are competitive, starting at 7%.
To apply for funding, the startup needs a business plan, an executive summary, and have at least one meeting with the SBDC to have their plan reviewed.
How to Position Yourself for Success:
Generally, these funds intend to promote real startups that have the potential to scale, are protectable (or IP-protected), and have a good leadership team (as exemplified through your business plan). To learn more about each of these funds, contact Tony Willis at LEAP.