One out of every ten U.S. businesses is veteran-owned. With a growing interest in entrepreneurship among veterans combined with increasing support for small businesses, more veteran-owned companies are expected to be launched in the U.S.
Veterans have acquired unmatched skills that are uniquely transferable from combat to the business world. Owning a business is a natural step to reinvest their talents, continue helping the country, stimulate economic growth in their local communities, and provide for their families. Like any entrepreneur, at one point or another, financing can help create jobs and scale their businesses.
There is strong marketing that surrounds venture capital (VC), a type of private equity that is generally provided by firms or corporate venture arms, as the one size fits all for every business. However, it’s important to realize that not everyone has to raise VC, and in some cases, not everyone should raise VC. As Indie VC’s Jason Garcia has said, “every type of funding is purposefully built to meet a need.” Below are several alternatives for funding that your veteran-owned business should consider when VC isn’t an option:
Veteran Specific Funding Options
The StreetShares Foundation is a 501(c)(3) nonprofit organization that exists to inspire, educate and support the military entrepreneurial community. Their grant program, Veteran Small Business Award, provides a boost of sought-after financial support to help veterans who lack the financial means to start or grow their small businesses. The award for their current program, Great American Military Entrepreneur Challenge, is $15,000.
U.S. Small Business Administration (SBA)
The SBA offers support for veterans as they enter the world of business ownership. Look for funding programs, training, and federal contracting opportunities. The SBA makes special consideration for veterans through several programs such as:
Military Reservist Economic Injury Disaster Loan Program (MREIDL): The MREIDL provides loans of up to $2 million to cover operating costs that cannot be met due to the loss of an essential employee called to active duty in the Reserves or National Guard.
Women Veteran Entrepreneurship Training Program (WVETP): WVETP Provides entrepreneurial training to women veterans, women service members, and women spouses of service members and veterans as they start or grow a business. SBA funds these entrepreneurship training programs through grantees that can lead to promising funding opportunities:
- Institute For Veterans and American Families (IVMF)
- Lift Fund
- Veteran Institute for Procurement (VIP)
- Service-Disabled Veteran-Owned Small Business Concern program (SDVOSBC)
SDVOSBC’s goal is to award at least 3% of all federal contracting dollars to service-disabled veteran-owned small businesses each year.
Non-Veteran Specific Funding Options
INTRO presents you with a menu of financial products based on your financial data. If you have interest in any of the funding options, it can introduce you to partners you’re already a fit for. INTRO works best for US & Canada-based companies with over $10,000/month in revenue. If you’re not quite there yet or based elsewhere, you can still create a profile.
Whether you scrape seed funding from personal savings, bring in customer-funded money to maintain operating expenses, or take out loans, bootstrapping is a viably proven strategy. Furthermore, you stay in charge of decision-making, and you don’t have to give up a piece of ownership in the company to a stranger. Ultimately, bootstrapping is hard, but being maniacally focused on solving a problem and running lean while working in the shadows can be an unfair advantage.
Since May 16, 2016, the Jumpstart Our Business Startups (JOBS) Act has enabled startups to use crowdfunding to offer and sell equity to the investing public. Not to be confused with donation or reward-based crowdfunding like you’ve become familiar with on Kickstarter. Startups can raise as much as $1 million founder-friendly capital from non-accredited investors on platforms like Republic.
Small Business Innovation Research (SBIR)
SBIR is intended to help businesses conduct research and development and accelerate the commercialization of projects. Funding takes the form of contracts or grants. Some of the agencies include the Department of Defence, National Institutes of Health, National Science Foundation, and Department of Agriculture. Approximately $2.5B is awarded through the SBIR Program across all agencies each year.
The accelerator experience is a process of intense and rapid learning within a 12-week time span. Startups exchange equity for cash investment, office space, programming, mentorship, and access to an extended network of investors and customers. Y Combinator will invest $125k in return for 7% of your company using a “post-money” Simple Agreement for Future Equity (SAFE).
Pitch competitions are for entrepreneurs with new business ideas who require seed funding. Entrepreneurs pitch their concept or defend their business, usually in-person, to a panel of judges. Competitions can range in prize money, length, and can be online or written. Confident founders with a knack for public speaking can extend their runway by succeeding on the pitch competition circuit.
These are just a few alternatives to funding your veteran-led business. There are a wide range of funding options that apply to your business like factoring, SaaS subscription financing, venture debt term loans, or mezzanine capital. Explore grants and affordable options and do due diligence to determine what makes the most sense for your family and company.