Two paths beyond a loan
Which fits depends on your location, your stage of development and how much ownership you want to keep.
Investors who take a stake
Venture capital groups fund your company in exchange for a percentage of its ownership. They may buy stock, lend money, or both, and usually earn their return when they sell that stock after a set period, often when the company is sold.
Programs that help you grow
Public and private economic development groups offer support outside the traditional path of borrowing money. What's available depends on where you are, your stage of development and your circumstances.
How a venture capital deal works
Venture capital deals are complicated, with many steps before any money changes hands. Research your investors and work only with reputable ones.
The National Venture Capital Association sets best practices for the industry and publishes model legal documents used in stock purchases.
Every firm has its own due diligence checklist. Knowing what paperwork they'll expect puts you ahead.
- 1Research investorsFind reputable groups that fit your company and your stage.
- 2Prepare your companyA pre-offer evaluation shows you how investors will see you.
- 3Due diligenceInvestors review your intellectual property, operations, logistics and documents.
- 4Agree the termsA stock purchase, a loan, or both, for a share of ownership.
- 5Investors exitThey sell their stake after a set period, often when the company is sold.
Due diligence, from either side.
Venture capital groups hire Praxis to review a company's intellectual property, current operations and logistics, and to verify its documentation.
Companies hire us for a pre-offer evaluation, so they present themselves in the best light before investors look.
Book an evaluationThe outside funding model
How funding, or the lack of it, can shape where a company ends up.
Where to look
National groups that can point you to investors and local programs, plus Kentucky funders from our ecosystem guide.
- Venture capital
National Venture Capital Association
National
Industry best practices, a directory of member venture capital groups, and model legal documents.
nvca.org ↗ - Economic development
U.S. Economic Development Administration
National
Can connect you with your local economic development organization.
eda.gov ↗ - Economic development
U.S. Small Business Administration
National
Can connect you with local programs, and runs federal grant programs for small businesses.
sba.gov ↗ - Economic development
National Alliance of Community Economic Development Associations
National
Can connect you with community economic development groups near you.
naceda.org ↗ - Kentucky
Community Ventures
Statewide
Small business lending and support for Kentucky entrepreneurs.
cvky.org ↗ - Kentucky
Kentucky Science & Technology Corporation
Statewide
Programs and capital for science- and technology-based ventures.
kstc.org ↗ - Kentucky
Mountain Association
Eastern Kentucky
Lending and business support for Eastern Kentucky communities.
mtassociation.org ↗
More Kentucky organizations in the start-up ecosystem guide.
Questions about funding
How do venture capital groups make money?
They take a percentage of ownership in your company, by buying stock, lending money or both, and earn their return when they sell that stock after a set period, often when the company is sold.
What is due diligence?
The review investors carry out before they invest. Each firm has its own checklist, but most look at your intellectual property, operations, logistics and documentation.
Can Praxis help me prepare for investors?
Yes. Companies hire us for a pre-offer evaluation so they can present themselves in the best light. Investors also hire us to carry out reviews.
Get ready for investors.
Book a free one-hour call, or reach us at info@PraxisInnovations.com.