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Funding Options for Start-Up Companies

The development and commercialization of new technology is a very expensive process. Yet, even today nearly 30 years after the inception of the Ben Franklin program, an entrepreneur or small business owner has very few options when it comes to potential money sources.

A start-up company needs an infusion of capital that serves as a bridge between the initial resources of the owner (including his/her friends and family) and follow-on funding opportunities (angel investment, venture capital, or debt financing).

Angel and venture capital groups tend to have little interest in really early-stage companies until at least the technology under development has been vetted. Traditional bank financing is usually not available until a company can demonstrate positive cash flow or has an asset base.

Even small but established manufacturing companies that are trying to become more competitive by adopting new processes or re-tooling for new tech-based products, often have few funding options. While some may be candidates for venture capital, most are closely-held family businesses that want to retain control of their enterprises and seek steady, controlled growth. In tight money situations, growth capital for these firms is not always readily available from banks.

The economic conditions that existed in the early 80’s when the legislation that created the BFTP was drafted were challenging. But, the economy was also the catalyst that led to the decision to invest in creating the Ben Franklin Technology Partners — an investment in the future of the Commonwealth.

There’s no doubt that making the decision to fully fund a program that invests in new, tech-based start-ups– especially when the economy is in a downturn, takes guts. But putting money into technological innovations and the folks who have the drive to start new businesses is the key to economic recovery and sustained long-term growth.