January 30, 2025
Funding is crucial to move any business or product from the idea stage to revenue. While there are many ways to acquire financing, the best option depends on the entrepreneur’s needs and business model.
Grants
Grants can be a valuable way for small businesses to secure funding without taking on debt or giving up equity. Consider the grant’s purpose to ensure it aligns with your business goals, as many grants support specific industries, innovations, or community initiatives. Search by business classification since some opportunities are designed for minority-owned, women-owned, or rural businesses. Connect with private and local organizations that offer funding, as well as state and federal government programs that provide grants to businesses driving industry advancements and regional growth.
Government Funding
While government funding is often associated with grants, state and federal programs offer various financial assistance options for those doing business in Utah.
- The Utah Innovation Center helps startups apply for federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) funding for innovative products, providing about $4 billion annually. The center also offers microgrants of $3,000–$5,000 through the Utah Technology Innovation Funding program to first-time Phase I applicants.
- APEX Accelerator helps small businesses secure government contracts through counseling, networking, and bid preparation. This program has facilitated over a billion dollars in federal procurement funding annually.
- The Utah Small Business Credit Initiative (USBCI), funded by the U.S. Treasury, enhances access to capital, particularly for underserved entrepreneurs. By partnering with banks and other lenders, the program allows flexible loan options, covering up to 50% of loans and blending its low-interest capital with standard loan rates.
- The Get Started: Business Idea Challenge, launching in February 2025, is a monthly pitch competition hosted by the Startup State Initiative in partnership with the Lassonde Entrepreneur Institute. With awards up to $500, founders can start or advance their businesses with short-term milestones.
Crowdfunding
Since the early 2010s, crowdfunding has become an increasingly viable way for a business to raise capital without relying on traditional lenders by pooling small contributions from many individuals online. It also helps to validate ideas and build community support. Successful campaigns set clear goals, maintain transparency, and often offer rewards such as early product access. Platforms like Kickstarter, GoFundMe, and Patreon cater to different niches, so it’s important to figure out which best suits the startup’s needs. Many Utah businesses, such as Thread, have leveraged this democratized source of funding.
Venture Capital and Angel Investors
Venture capital is a form of private investment commonly associated with tech and high-growth startups. VC firms pool funds from multiple investors and provide funding in exchange for equity, assuming significant risk but with the potential for substantial returns. Benefits often include mentorship and industry connections.
Angel investors operate similarly but invest personal funds rather than pooled capital, focusing on early-stage startups. Utah’s Park City Angels and Salt Lake City Angels are among the leading angel investment groups fueling the state’s startup ecosystem.
Bootstrapping
Bootstrapping, which entails funding a business using personal savings, early revenues, and careful cost management, is often the most straightforward way to start a business. While growth may take longer without external investment, it allows founders to retain full control and avoid debt or investor obligations. Companies like Consolve and Utah’s Meat and Food Co-op have successfully reinvested profits to expand their operations.
Conclusion
As there are many ways to fund a startup, it is essential to research and assess the business’s needs before committing to a source of financing. In many cases, combining multiple funding sources may be the key to achieving profitability, allowing companies to choose options that best align with their goals.
The information in this article is current as of the publishing date and is intended for informational purposes only. This article does not, and is not intended to, constitute legal, tax, or business advice. Any resources and organizations mentioned, unless an entity of or a partner of the state of Utah, are not formally endorsed by the Startup State Initiative or state of Utah.