Objective
This resource provides summarized information for identifying and pursuing funding for student teams pursuing a start-up business. The information presented here is not intended to be comprehensive. However, it addresses several important questions that aspiring entrepreneurs may have about the need for funding, where and when to look for funding, and how to go about pursuing these funding alternatives.
Why Consider Funding
Identifying and pursuing funding is an integral part of building your efforts to build and grow a start-up venture unless you are able to and willing to fund the venture yourself. The 'ability' to fund your start-up venture yourself means you have the required funds available, on-hand, and in a state that allows you to transfer the funds into the start-up venture. The 'willingness' to fund your start-up venture means you are willing to assume risks associated with building and growing the start-up venture and you are willing to share control over the resources with a team (that will often go beyond yourself).
A student team should interested in building a start-up venture may want to consider different sources of funding. The Incubator Program organized by the E-Hub is just one of these possibilities.
| Source | What it means | Typical Funding level |
|---|---|---|
| Bootstrapping (Self-funding) | The founder uses personal savings or revenue generated from the business to fund its growth. | Typically up to tens of thousands of dollars, limited by the founder's personal resources |
| Family and Friends | Financial help from the founder's personal network. | $10,000 to $100,000, depending on the network's capacity. |
| Incubator Programs | University or organization-led programs providing workspace, resources, mentorship, and seed funding | $5,000 to $50,000, typically non-dilutive. |
| Accelerator Programs | Fixed-term, cohort-based programs providing mentorship, funding, and investor access in exchange for equity (often 5-7%) | $100,000 to $500,000 and extensive follow-on investment opportunities |
| Federal Grants (SBIR, STTR) | Grants provided by federal agencies to support innovative R&D in specific areas. | $50,000 to $250,000 for feasibility studies (Phase 1), $500,000 to $1,000,000 for full R&D (Phase 2). |
| Angel Investors | High-net-worth individuals investing in startups in exchange for equity. | $25,000 to $500,000. |
| Early Stage Seed Funding | The first institutional funding round, often led by seed venture funds or angel groups | $500,000 to $2 million. |
| Venture Capital Funding | Institutional funding through staged rounds (Series A, B, C, etc.) in exchange for equity. | Series A: $2 to 15 million for market entry; .Series B: $15 to 50 million for scaling operations; Series C and beyond: $50 million+ for market dominance and expansion. |
| Bank Loans and Lines of Credit | Debt financing options from financial institutions. | Varies, typically $100,000 and more |
| Crowdfunding | Raising small amounts from a large group via platforms like Kickstarter, Indiegogo and others. | $10,000 to $1,000,000+ (varies by platform and model). |
| Corporate Venture Capital | Investments from large corporations in startups aligned with their strategic goals. | $1 million to $50 million+ |
| IPO (Initial Public Offering) | Raising capital from public markets by offering shares to investors. | Typically hundreds of millions of dollars |
Funding needs vary across different stages of growth for a start-up venture: from the Idea Stage to the Maturity Stage. As a student team, you can consider the different stages and funding needs at each stage to determine suitable funding sources, including but not limited to the Incubator Program organized by the E-Hub.
| Start-up Stage | Needs funding for | Suitable Funding Sources |
|---|---|---|
| Idea Stage | Feasibility studies, Prototypes, Market Research | Self-funding, Friends & Family, Incubator |
| Validation Stage | MVP development, Market testing | Angel Investors, Accelerators, Crowdfunding |
| Growth Stage | Scaling operations, Market entry | Early-stavge VC, Venture Capital, Corporate Venture Caital |
| Mature Stage | Global expansion, Dominance | Late-stage Venture Capital, IPO |
A student team may consider different funding pathways for their start-up venture based on the type of business. For most business types, the student teams can participate in the Incubator Program organized by the E-Hub.
| Type of Start-up Venture | Typical Funding Pathway |
|---|---|
| Innovation-driven Entereprise | Incubator → Exterrnal Incubators → Angel Investors → Accelerators → Seed Funding → Venture Capital (Series A-C) → IPO |
| Small/Lifestyle Business | Bootstrapping → Incubator → Family & Friends → Crowdfunding/Loans |
| Family Business Diversification | Incubator → Family & Friends → Crowdfunding → Loans |
| Side Hustle | Bootstrapping → Incubator → Crowdfunding/Presales |
| Creative Industry | Bootstrapping → Incubator → Crowdfunding/Presales |
| Mission-Driven | Service Learning → Grants → Crowdfunding → Impact Investors → Corporate Partnerships |
Set Lofty Goals
If you are pursuing a start-up venture, it is always good to set high and lofty goals. You may not have the ability to articulate these fully yet (consider, e.g. Amazon, Uber, AirBnB, Google, and others). What you can do, however, is to ensure that the goals you set for yourself are not small. Whichever industry you are in, there is room to grow to a large footprint.
Respect the Process
Building a business takes time and effort and resources, no different from a corporate career in that regard. You would not consider it normal to apply for a job as the CEO as your first job. Similar that that - why would one consider it normal that the first pitch presentation you will make is one that seeks millions of dollars from an Accelerator / Angel Investor/ Grant Funder. Give yourself a chance to grow!
Leverage the Resources
The E-Hub allows you access to several different kinds of resources. Leverage these! Examples include: (a) one-on-one meetings with faculty and alumni mentors, (b) opportunity to develop your venture with the Orbit platform, (c) discussions with alumni through coaching sessions, (d) resources to navigate the legal landscape and much more. Leverage these resources to to build your venture as you pursue funding.
Useful External Resources
- Contee, C. 2024. What To Know As A First-Time Entrepreneur Seeking Investors. Forbes. June 2024. https://www.bentley.edu/centers/entrepreneurship-hub/e-hub-disclaimers Accessed Dec. 2024.
- Startup Resources. 2024. Navigating the Funding Landscape: A comprehensive guide. https://startupresources.io/navigating-funding-startups/