This one-option-only landscape also isn’t conducive for large portions of the founder population that have limited access to VC funding. Women founders received just over 2 percent of the venture capital allocations in the U.S. for the past several years (and that went down in the last half of 2020). Latinx and Black women have it far worse, receiving 0.32 percent and 0.0006 percent of VC funding, respectively. And founders from lower socioeconomic backgrounds often don’t have access to a network to fuel the Friends and Family round that often leads to larger VC dollars.
Luckily, there are many other financing opportunities to consider in the early stages of your company.
Crowdfunding and equity crowdfunding are on the rise, allowing folks with a large network to collect smaller dollar amounts in high volume while demonstrating product demand. Existing and new debt-based vehicles are rethinking risk assessment, opening the door to many profitable business owners to access debt and credit. For companies with a healthy sales track record, invoice factoring is a good option to resource individual purchase orders.
Read full story: https://builtin.com/finance/startup-financing-questions