On our Hello ChaosTM podcast, LifeTagger co-founders explained how demonstrating some swag helped them negotiate a better deal upon graduating the accelerator.
Dr. Stoner’s cannabis brand raised $420K by selling shares. (No, we’re not making that up.) According to its filing with the Securities and Exchange Commission, the minimum investment for any investor is $50K, and the company has $4.3 million in shares available. So, they’re making a play to spread the risk across many investors.
Doing the Debt Thing
The vast majority of founders go to a large or small bank when they need capital — 90%, according to the federal reserve’s 2021 Small Business Credit Survey conducted late last year. These South Carolina companies have fewer than 500 employees, with at least one who is not the owner. Only 8% said they sought the kind of equity investment described above.
Here, too, there’s a mix-and-match process. Pretty much everyone sought funds from a large or small bank. And 65% applied to credit unions, online fintech companies, finance companies and CDFIs, or Community Development Financial Institutions.
Interestingly, more than half of companies that needed funds said they didn’t apply. Even in the throes of the pandemic, they remained averse to debt, felt it would cost too much, or were discouraged about their chances of being approved.
Apparently, that last bit of pessimism wasn’t completely unwarranted. Only a third of companies received all the funding they asked for, while 39% didn’t get any of it.
Best Banking Bets
If you’re thinking of going the fintech route, know that only 32% of respondents found happiness with online banks.