In the first post of my three-part series on developer funding, I discussed why getting capital from a qualified outside source is important. Today, I’ll help you find that funding source by listing your options, which includes the exciting $15M Lighter Capital Intuit Developer Fund.
How to Find the Best Developer Funding for Your Startup
As a developer, your time, energy, and finances are being stretched to the limit as you work feverishly to grow your business. To help, I mentioned a few developer funding options in my first post, including crowdfunding, online lenders, and revenue-based financing (RBF). We’ll take a look at these today as well as at traditional bank loans and VCs (venture capitalists).
- Traditional bank loans: Many startups consider traditional bank loans a viable way to get funding. You can choose how you spend the funds, and with a business loan, you don’t need to worry about giving up equity. Also, you won’t have someone taking a seat at your board table.
The challenge is most banks require a track record of successful operation before they’ll give you a loan, a track record you may not yet have. They also require hard assets or a personal guarantee in exchange for their loan. If your company doesn’t make it, you may lose everything.
- Venture Capitalists (VCs): VCs are looking for early-stage companies that need the capital they can provide and for ones that have long-term potential. You give them equity (anywhere from 20-40%) and your VC partner shares their expertise with you.
The challenge is that very few startups meet VC standards. Also, your new partner’s position on the board gives them more say in your future than you may want them to have.
- Crowdfunding: The investing world has grown, giving entrepreneurs a wider audience of potential investors. With crowdfunding, individual investors listen to your pitch online and can invest small amounts of money for products, interest, and/or equity. This is a great opportunity for startups like yours to get the cash you need without relying on your own sources (such as a personal paycheck or family/friends) and tells you if your product is of interest to consumers.
The challenge is that this may not be the best bet for tech solutions or services, you must satisfy multiple investors on a timeline, and you may need to have assistance from an investment lawyer to make sure regulations for crowdfunding are being met.
- Online lenders: They have replaced traditional bank loans as the go-to lenders for startups with little or no business collateral. The application process is often fast with same day loans a possibility. Online lenders can also provide smaller amounts versus larger, one-time infusions.
The challenge with online lenders is that you can typically only borrow less than $100,000 with high interest rates, the fees and payback structures are complicated, and they expect payment immediately. If you’re looking for help with long-term growth, this isn’t the way to go.
- RBF: Revenue-based financing allows you to capitalize on your recurring revenue. RBF doesn’t require hard collateral or personal assets. Instead, you make payments based on a percentage of your monthly revenue. Fixed interest rates don’t apply. You retain control of how you run your business and don’t have to give up equity, it’s less risky, and you will always be able to afford your payments because it’s based off your monthly revenue.
The challenge is qualifying for RBF: you need to have revenue to receive the funding. There’s also the loss of operating capital per month, but the benefit of having the initial capital outweighs this concern.
RBF: The $15M Lighter Capital Intuit Developer Fund
Intuit and Lighter Capital, one of the first lenders to use RBF to fund tech companies, decided to team up and help Intuit business owners with their fiscal needs and put together the $15M Lighter Capital Intuit Developer Fund.
Lighter Capital’s CEO, BJ Lackland, said this about starting the fund: “We started this fund because we see a strong growth potential for Intuit’s developer partners, especially those building on the QuickBooks App Store platform. We want to help accelerate that growth by providing these companies the funding they need to get to the next level.”
If this sounds like a developer funding option for you, the application process is quick and easy. Here’s what you need to know:
- The fund dedicates $15M to provide Intuit developers access to $50K-$3M in growth funding
- Qualifying developers will receive funding within 4-6 weeks
- You won’t have to give up equity or dilution
- You’ll be able to scale your Intuit solution quickly
Developer Funding Options are Out There
Your decision to pursue developer funding is smart. For you to grow, you need financial assistance that won’t drain your personal resources.
I hope you’ll check out the $15M Lighter Capital Intuit Developer Fund as you review your options. In the meantime, be on the lookout for my third post coming soon where I outline how best to allocate your funding once you get it.