Start-up Financing 101: Cash is King and Always Extend Your Runway

With Valentine’s Day coming up I felt I would try to spread the love and passion of business a little. The idea of starting your own business is such a romantic notion. Snuffing the system, being your own boss, working your behind off for what you’re passionate about, and creating something amazing and (hopefully) disruptive enough to make the world a better place! But then reality comes crashing down when you realize that in order to accomplish this you need money. Potentially a lot of money. Not many of us have the luxury of having a wealthy (and highly understanding) partner who can support us during our entrepreneurial endeavor or a nest egg that is able to be invested (or risked depending on your perspective). As much as I hate to admit it: Money makes the world go ‘round and it is even more imperative for start-ups.

As someone who would love to work for a start-up (or small yet rapidly growing company) and who is immersed in this world as an entrepreneurship MBA (trust me: it’s not an oxymoron) thinking about financing for such ventures is daunting. Luckily, I’m in Oregon which provides multiple opportunities to fight the ever shrinking runway of start-up finance. We have an extensive network of traditional funding paths. Oregon hosts many angel investment opportunities including the Bend Venture Conference, the Oregon Angel Fund, Angel Oregon, and the Willamette Angel Conference. We also have opportunities for seed stage investments with the Portland Seed Fund and the newly established UO Foundation Seed Fund. But there is a rapidly growing form of funding taking root and thriving in the Pacific Northwest!

Crowdfunding: the wave of...now?

According to a study done by the Crowd Data Center, Oregon ranked 4th in the best states for crowdfunding. Portland ranked 3rd for the top city while Seattle ranked 7th and San Francisco ranked 1st! I know San Francisco isn’t technically in the Pacific Northwest, but it is just a hop, skip, and jump away and is almost like an older, more experienced sibling when it comes to start-up financing. (Sand Hill Road, anyone?) Now I know what you are thinking…crowdfunding?!?! Yes. Crowdfunding. Changes to SEC regulations have allowed platforms such as Kickstarter, Kiva, Crowdfunder, and multiple others to tap into the pockets of the masses to help finance fledgling companies and products get off the ground. (Check out this Forbes article for more.) No longer do you have to be an accredited investor or give up thousands (potentially millions) of dollars to play a major part in the economic development of your community. After all, small businesses are a powerful driver in job creation. And if one is going to have a job, why not do something that speaks directly to and of you? Not everyone is an entrepreneur. But thanks to the great support shown through the success of crowdfunding, almost anyone can help an entrepreneur be that much closer to success.

Written by Jenny Palm

Jenny a current Oregon MBA and Graduate Teaching Fellow in the Lundquist Center for Entrepreneurship. When she is not busy exploring how she can change the world, you can find her outside doing almost anything...especially finding that secret stash of powder on her skis! She has hopes to either help develop an awesome outdoor-oriented start-up or flex her organizational prowess in ski resort event operations.