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Funding Sources for the Creative Urban Entrepreneur
By Team Afro on Tue, 07/26/2011 - 09:56
Anybody who has a small business or is thinking about starting one knows that getting funding from traditional sources is extremely difficult if not impossible. Banks are holding onto their money; refusing to give loans to startups without an inordinate amount of collateral and other justification. For those who need money to get their entrepreneurial projects off the ground creativity and ingenuity are required to work your business and to get the necessary capital to launch it. While 90% of the articles out there will give you the same "go to the SBA runaround", here at AfroDaddy.com we realize that after banging your head on that wall you might want to try a different approach. Although the following sources may not yield results (we sincerely hope they do), they should at least get you thinking about exploring alternate sources to fund your business or artistic endeavor.
TheCASHFLOW TheCASHFLOW is a funding opportunity that offers a proven eight-step plan for urban entrepreneurs who want to start their own business or improve their existing startup. Entrepreneur members of TheCASHFLOW pitch their business ideas to a group of investment experts who then ultimately recommend some of the best project for funding. Founded by Dan Carriere, Magnus Greaves, Lucas Riggins and Ryan Stoner (founders of 100 Entrepreneurs) TheCASHFLOW provides entrepreneurs with $10,000 and business advice to help jump start their successful business venture.
KickStarter Kickstarter (featured in CNN, NPR and The New York Times) is a unique funding website for entrepreneurs in the area of music, film, art, technology, design, food, publishing and other creative outlets. Entrepreneurs who have these types of projects (ex: creating a new film) list their project on the website and potential funders commit money to the project.
Anybody can contribute to the project and the owner of the project retains 100% project ownership. The only catch with this funding mechanism is that if the funding goal set by the owner is not reached within a specified period of time none of the money can be accepted. This all-or-nothing concept is setup to protect both the investors and the project owner.
Fair Warning: Although there is no way any investor could lose their money, some potential users of KickStarter are disgruntled because their projects were turned down for inclusion on the website. KickStarter certainly has the right to select the projects they want for their site so I personally would not call this an obstacle or anything unseemly about the KickStarter process.
8/13/11 Update: Here is a recent success story about a sister who raised $44,000 for her web series.
Y Combinator For those with a great idea for a technology startup Y Combinator might be a great choice for you. Founded in 2005 Y Combinator does investments twice a year (approximately $18,000) for around 60 tech startups. The startups move to Silicon Valley for 3 months, where the Y Combinator team works intensively with them to get the company into the best possible shape and refine their pitch to investors. Each cycle culminates in Demo Day, when the startups present to a large audience of investors. After Demo Day Y Combinator staff and their alumni network continue to help founders for the life of their company, and beyond.
Since 2005 Y Combinator has funded over 300 startups, including Loopt, Reddit, Clustrix, Wufoo, Scribd, Xobni, Weebly, Songkick, Disqus, Dropbox, ZumoDrive, Justin.tv, Heroku, Posterous, Airbnb, Heyzap, Cloudkick, DailyBooth, WePay, and Bump.
What you may not know:
The largest African American bank in the country is Carver Bank with over $700 million in assets. They have been around for over 60 years and specialize in loaning money to traditionally under served African American individuals and community businesses. This certainly should be a source of funding to be explored. If they cannot get you a loan they may be able to point you in the right direction.
Y Combinator has recently received funding and backing from Facebook. If your project is really good and gets backing from Y Combinator you could be on your way to riches.
What you need to know:
In any funding situation take special care to insure that your rights are protected and that you maintain ownership of your company. Giving away too much ownership in your company for the sake of initial startup money could spell disaster for you in the long term. Certainly loss of majority ownership severely limits your ability to make decisions about the future and direction of your company.