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Photo of Professionals at Ezell Law Firm, LLC
More Than 40 Years Of Legal Service To The Baton Rouge Region

How startups get funding to launch and grow their companies

On Behalf of | Oct 8, 2023 | Business Formation, Business Law |

Baton Rouge Legal Blog

Entrepreneurs in Louisiana have the ideas and energy to create new businesses. Sometimes people have the personal funds to finance their business dreams. Launching a startup with your own money gives you the greatest level of control, but you likely do not have sufficient personal funds to proceed. You will have to obtain loans, grants or outside investors to make your business plan a reality.

Startup loans

You could seek funding from family members or institutional lenders. Family-sourced funds may allow you to retain control and even negotiate flexibility with repayment terms. However, you run the risk of experiencing family disputes regarding how you run the company.

A business startup loan from a bank does not come with the risk of disrupting family relationships. The challenge here is qualifying for a loan on the basis of a largely unproven business idea.

Startup grants

Government agencies and nonprofits sometimes offer grants to help people start their own businesses. These organizations tie their grants to certain qualifications, such as your location or the promotion of specific community goals.

Series funding

As an entrepreneur, you have likely heard of series A funding. Subsequent rounds of funding go by the terms series B, C and so forth. With series funding, you attract outside investors who put their money into your company. In exchange, they get an equity stake in the operation. The structure used for your business formation will need to reflect the presence of multiple owners.

Venture capitalists and angel investors

If your business shows strong potential, venture capitalists or angel investors could provide the necessary funds to operate and grow. Venture capitalists typically play an active role in managing the company. Both types of investors expect equity in the company.