There are about 2.4 million businesses around the nation that are owned or run by veterans. That’s a clear sign that military veterans rep a great untapped source of entrepreneurial skill. However, the reality is that there are still a few funding options for them. Here’s a look at four of the best programs to get business funding as a veteran.
#1: Hivers and Strivers
Just as there are angel investors and venture capitalists, there is also an investment fund. Hivers and Strivers focus on startups founded by graduates of U.S. military academies. This is more like an angel investment fund. Startups still at the pre-revenue stage can line up early stage financing.
In most cases, Hivers and Strivers will invest from $250,000 to $1 million per company. With hopes that the investment will have a huge payoff at the end. In the lines of the VC community, this fund is looking for a “ten-bagger”.
An investment that has the potential to have a 10 times payoff. Perfect chance if you’re a U.S. military academy grad with a hot new idea.
#2: Street Shares Foundation
Street Shares is an online lender that connects veteran startups with finance sources. It’s easy to apply online. It only takes 10 mins to describe what your business does and how it plans to use the cash.
From there, the funding application goes into an auction-style format. Then it’s investors can bid to fund up to 90% of the total deal. In some cases, they might decide to fund as little as $25.
In other cases, they might fund tens of thousands of dollars. So, it’s really a mix of a P2P lending platform and a crowd funding platform. The founders of Street Shares describe it as “Shark Tank meets eBay.”
What makes Street Shares so unique is that it holds monthly grant programs to award worthy veteran-owned businesses.
In February 2017, for example, Colorado-based IncomeDesigners.com took home the top prize of $5,000.
Brian Zimmerman, a Marine veteran founded the company. In October 2016, Brian graduated from the Entrepreneur Bootcamp for Veterans With Disabilities (EBV) program at Purdue University.
The idea behind IncomeDesigners.com is to help people discover and build upon extra streams of income.
In short, the goal is to help people produce extra income that changes their lives. That’s what made the concept such an attractive pitch to Street Shares.
#3: The Veterans’ Opportunity Fund (VOF)
This is a VC fund that focuses on veterans. In fact, it is the first-ever VC fund formed to invest in veteran entrepreneurs. In a typical deal, VOF might invest up to $3 million.
While VOF primarily focuses on businesses in the East Coast. But it does take a wide view of which industries it will consider for investment.
Currently, VOF is looking at deals in the technology, healthcare, business services, and manufacturing. Check them out when you are either in Boston, New York or Washington.
#4: Self-employment grants from the Veterans Administration
The Veterans Administration (VA) will review various self-employment grant applications if you are a military veteran with a service disability. Each applicant must submit a business plan if they want to be considered for business funding as a veteran.
The level of severity of the service disability (Category I or Category II) determines the type of funding a veteran is eligible for.
Military veterans with the most serious disabilities will receive a Category I. Category II funding is for the less severe cases. Obviously, the greater the need, the greater the ability of the VA to help.
A VA grant does not need to be repaid. A grant can be had for a wide range of needs. This can include but is not limited to equipment, inventory, training, and marketing. The goal is to give disabled veterans the opportunity to launch their own business.
Understanding the differences in business funding as a veteran
Those are four of the best funding programs for business funding as a veteran. The source of funding and allocation means differs from one to the other. In some cases, it involves filling out an application and meeting certain requirements, much like a loan.
In other cases – such as the Street Shares veteran grant program – it involves selling your business in front of investors.
It’s important to remember that the type of financing really matters when looking for business funding as a veteran. In addition, there is the traditional VC investment, where financing is offered in exchange for a share in the company.
You might receive $1 million or more from investors. But you also have to give away part of the ownership of the company to them. If you give away too much, you won’t be as flexible as to the direction of your company. This is important as your investors will want to see a return on their investment.
It’s important to understand what you are agreeing to before signing up. Find out what the expectations are if you do receive money. The good news is that the investment community is finally turning its attention to the entrepreneurial dreams of military veterans.
Thus, creating a number of great options to help them create the companies of their dreams.