Business

Funding Options for Start-Ups

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It doesn’t matter if you’re a start-up or an established business owner, you’ll never turn down a quick injection of cash into your business. In an ever-changing world capital is king. But how do you decide what funding option is best for your business?

Check out a few options below:

Venture Capital

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Venture capital is money provided by investors to start-up firms and small businesses with perceived long-term growth potential. Most venture capital comes from a group of wealthy investors or investment banks. Reputable venture capitalists may offer years of business experience that can help push your business forward. But those looking to pitch to VC’s need to make sure they have a viable business plan in place, and are willing to give up some ownership and autonomy.

Tax Incentives
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The Scientific Research and Experimental Development (SR&ED) Program is a federal tax incentive program set in place to encourage Canadian businesses of all sectors to conduct scientific research and experimental development. The program awards over $4.5 Billion to 18,000 taxpayers each year, 75% of these are small businesses.

The Ontario Interactive Digital Media Tax Credit (OIDMTC) is refundable tax credit, meaning the amount of the credit, less any Ontario taxes payable is paid to the qualifying corporation. The basic criteria is the product must primarily be for informational, educational or entertainment purposes. Examples of eligible industries include digital gaming, e-learning, arts & entertainment and news. The credit is one way the provincial government has committed to the development of digital media products in the province.

Government Funding

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Accessing capital is one of the toughest challenges for new and existing businesses. Government grants can add a quick injection of cash into your business, while validating your business plan. But there is a common misperception that government grants equal free money. Unfortunately government grants in Canada are usually specific to location and/or industry. Luckily, there are a few grants available to new and existing businesses on both the federal and provincial level. These grants are in place to help push viable businesses forward, but generally come with a set of terms and conditions.

Click here for more information on grants, financial assistance, and contributions.

Crowdfunding

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Crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet. In the last few years it has become an increasingly popular method for start-ups to acquire capital. Entrepreneurs like the idea of cutting out the middleman, no longer needing the endorsement of a commercial bank to secure capital for the business. Pitching directly to the consumer, can give you an indication of whether of not you have a viable business idea. In addition, running a successful crowdfunding campaign via social media can help spread your company’s message around the globe.

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