Five main sources of capital available to startups:
Entrepreneurs and founders have a range of options to consider when determining how to raise funds to develop their venture. These include:
Sources of capital for startups
Alberta Enterprise does not invest directly in Alberta companies, nor do we provide direct support to entrepreneurs. Instead, we invest in VC funds that have a track record of success, strong global networks and a demonstrated commitment to the province of Alberta.
That said, we would like to share some advice to help increase your understanding of VC funds, how they can help your commercialization efforts, and how to access these funds.
Family & Friends:
Loans and/or equity investment by family and friends
Bootstrapping:
Founders self-finance the venture through savings, debt and/or revenue
Grants
Banks:
Bank loans and operating lines of credit
Investors:
Angels, VCs and private equity
Most businesses start out by seeking loans or investments from family and friends. They do this because it can often be difficult for start-ups with no proven product or revenue stream to secure capital through banks and traditional lending institutions. Venture capital funds are a unique source of capital created specifically to meet the challenges technology start-ups face.
What you need to know about venture capital funds
VC funds who make the decision on which companies they invest in. They are very selective. They will ask the following when making their investment decision:
- Is the company in the technology and innovation sector?
- What is the age and stage of the venture?
- Can the venture scale into a large business quickly?
- Does it have unique intellectual property or a defendable competitive advantage?
- Can they exit and achieve good returns after a period of around 3-7 years?