SOURCE: JumpStart

JumpStart

February 23, 2009 16:24 ET

When Angel and Venture Capital Won't Work: IdeaCrossing Provides Startup Capital Options for Entrepreneurs

CLEVELAND, OH--(Marketwire - February 23, 2009) - It pays to know all your startup capital options in a tight economy, as Angel investors and Venture Capitalists become ever more selective and guarded against risk.

"Angels and VCs are historically more risk-adverse in a challenging economy," said Tiffan Clark, Marketing Vice President of JumpStart Inc., the venture development organization behind IdeaCrossing, a free online resource that connects entrepreneurs with investors and business mentors. "Entrepreneurs seeking startup capital need to be open and creative in their approach to uncovering sources of funding."

When Venture Capital and Angel investor funding are not practical options, it helps to put all of your startup capital resources on the table:

Personal savings and credit cards: It's common for entrepreneurs to dip into savings and borrow with plastic, especially when personal credit history is poor.

Friends and family: Often a first source for startup capital, make sure you clearly spell out loan terms and payment schedules upfront to avoid unnecessary tensions.

Home equity loans: Usually easier to secure than other sources of capital, the downside to this loan is significant -- your house is on the line if your business fails. If you choose this route, prepare a short-term payment plan to get your home off the hook as quickly as possible.

Bank business loans and credit unions: Among the largest sources for startup capital, these lenders are worth a try, especially if you have an established relationship. Remember, banks expect the same profit potential and careful planning as do VCs and angels, and they are also typically risk-adverse in tight economies.

Federal grants and loans: A federal loan is essentially a bank loan, which often comes with lower rates than private bank counterparts -- though company founders must personally guarantee the loans. Grants require a lot of preparation, but are appealing because they do not require payback.

About IdeaCrossing

IdeaCrossing (www.ideacrossing.org) is a free Internet resource available to all individuals and organizations with an interest in supporting and promoting entrepreneurial activity. IdeaCrossing helps entrepreneurs find the assistance and startup capital they need to launch promising new business ventures. Additionally, IdeaCrossing serves the Angel and Venture Capital communities by identifying and screening new investment opportunities. Simply stated, IdeaCrossing is about creating the connections that build businesses.