From credit to crowdfunding, startups have more cash flow options now than ever before. Getty Images

When it comes to raising money for your startup, there's plenty of fish in the sea, however, navigating the rough waters can be difficult.

Houston Community College put on a Small Business Summit on June 13 and gathered a group of financial professionals to represent several types of funding options, from venture capital to microlending.

Crowdfunding

The crowdfunding game has changed, says Rhian Davies, business development manager for LetsLaunch, an equity-based crowdfunding tool.

While most people think that donation-based crowdfunding — like GoFundMe or Kickstarter that give you the product or thank-you gift when you give — are the only options, that's not the case. And, investing using these platforms doesn't mean anything to you if the company sees success.

"If it makes it big, you're not going to get anything back," says Davies of these types of platforms.

But the JOBS Act in 2012 changed everything. Now, companies fundraising on crowdfunding sites can trade in equity for funds.

"Previously, investments were reserved for wealthy individuals — accredited individuals — who had a certain amount of money could invest in businesses," says Davies. "Equity crowdfunding opened that up."

With crowdfunding, you can also run other types of fundraising efforts at the same time, spreading out your options.

"It allows (the community) to invest in your business and it allows you to pass the hat and have people come on board," Davies says.

The other benefit to using the LetsLaunch platform is the team assists the startups every step of the way, from uploading a digital pitch deck onto the LetsLaunch platform and preparing paperwork to filing with the SEC.

However, one of the major challenges for startups is deciding what their funding goal is. Davies says you do have to hit a certain funding goal to be able to take that cash home, and for LetsLaunch, they look for that figure to be $10,000 minimum. Anything less than that isn't worth it — from both the LetsLaunch and the startup's perspective. The maximum value for equity crowdfunding is capped at just over $1 million — per the SEC.

Venture capital

VC funding is where most people's minds go when it comes to startup funding. And this type of funding is in an evolution phase too, says Remington Tonar, managing director at The Cannon Houston. While traditional VCs want a three-times return in five to seven years, some firms have more on their minds then just the money.

"There's a new phenomenon in venture where a lot of early stage investors and angel investors are looking at social impact investing," Tonar says. "They want to invest in women- or minority-owned businesses or companies that have a sustainability or social impact component to them. For those investors, the return demands are much more flexible."

Not only are they more flexible on returns, but VCs want more hands-on roles at the companies they invest in. Tonar says venture capitalists don't want to give passive capital.

Another way VCs differ from other types of funding is they are looking for something different in the companies they invest in — they want the next big thing.

"What venture capitalists really look for is disruptive business that are creating value in news ways," Tonar says.

And investments can be industry agnostic — VCs aren't reserved to just tech and computing industries.

"Most people would not have thought the hotel industry was a great industry for venture capital until Airbnb came along," says Tonar. "Most people would not have thought that taxis were a great industry for venture capital until Uber came along."

Fundraising through VC firms is a very personal process — they are investing in you, the founder, just as much as they are investing in the company or idea, Tonar says. You can have a horrible credit history or have declared bankrupt in the past, and while they will find that out, it's not a dealbreaker like it would be for a bank or traditional loan process.

"But if the investor feels that the idea has value and can create value and meets their risk profile, they will look at your startup and go through their due diligence process."

Microlending

A new trend in funding options is microlending — a type of loan process that caps out at $50,000. Lisa Riley is Houston market president for LiftFund, one of the largest microlenders in the United States.

Since the amount is smaller, the risk is smaller too. The type of customer LiftFund looks for is the person or company that's been denied by other banks.

"It's not always because of something negative with the customer," Riley says. "There are certain industries where it's very difficult to get finance right now."

Just like the trend in VCs, these types of lenders want to be hands on too to help secure success and a return.

"The last thing we want to be is another monthly obligation or a debt — the noose around someone's neck suffocating their small business," Riley says. "We want to make sure and walk with you and hold your hand as long as you'll hold mine so that when we give you your loan it's the right amount for your business and the right time."

Traditional loans and factoring

Of course, conventional loans is still an option, as is factoring — the process in which a business sells its accounts receivables to a third-party entity, called a factor.

Peter Ellen, senior vice president at Amegy Bank, explains the process as being pretty traditional. His bank wants to see a secure and profitable business on trach for growth.

"Typically, we look for a business that's been established for two years, that has generated a profit, and can show a clear path of repayment," Ellen says.

Again, like other funding options, Ellen says a relationship with the company is important.

"That's really what we look to do, is to form a relationship at an early stage with a company, really understand what they do, and help assist in the growth and success of their company," he says.

SBA loans

SBA loans are another lending option for startups to consider, Aziz Rahim, senior vice president at Wallis Bank, explains.

Different from a traditional loan process, SBA loans are guaranteed by the Small Business Association up to 85 percent, which lowers the risk for then lending partner.

Other benefits to SBA loans are lower down payments, generous term lengths, and caps on interest rates.

"The good thing about SBA loans compared to conventional loans is SBA loans do not balloon," Rahim says.

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Gowing femtech company chooses Houston for first out-of-state expansion

A startup dedicated to comprehensive pregnancy, birth and postpartum care has expanded from its Chicago birthplace to Houston.

Last summer, Partum Health raised $3.1 million in seed funding, which makes it possible for the company to begin a nationwide expansion. That begins in Space City.

“We looked at states where there is work to do on outcomes for maternal health. Texas rose to the top and Houston, in many ways is fairly close to Chicago, our home city. The really thriving healthcare ecosystem attracted us as well,” CEO and Co-Founder Meghan Doyle tells InnovationMap.

As a mom of a seven-year-old and a nine-year-old herself, Doyle says that she experienced the gap firsthand in what’s available to women beyond what her obstetrician or midwife does.

“You had to work really hard to cobble together the care you needed. It was a matter of putting together my personal experiences of realizing it’s not just me, it’s systematic,” says Doyle. “I couldn’t get that problem out of my head.”

Neither could her co-founder and head of operations, Matt Rogers, a father of twins whose family had to navigate the NICU and life-threatening complications. They started working together on the business in earnest during the COVID shutdown and debuted Partum Health at the beginning of 2021.

Partum has begun partnering with obstetricians and midwives to help select complementary care that includes lactation support, pelvic floor physical therapy, mental health services, nutrition counseling and doula care. What’s unique about the plan is that, from aiding in behavioral health problems to addressing nutritional issues, the user’s team is distributed around the Houston area and are fully virtual. Physical therapy and other services that must be done in-person may take place either in-home or at third-party locations.

“We’re still in the process of credentialing with insurance companies,” says Doyle.

In Illinois, Partum is already working with BlueCross BlueShield, United Healthcare, Aetna and Cigna for clinical care, so Doyle says she is confident that those companies will soon follow suit in Texas.

While hiring a team in Houston that includes a client care lead, Doyle says that Partum is simultaneously providing services and getting to know the market better. They’re also building more bundled models of care to better assist users in their new landscape.

Doyle and Partum Healthcare participated in the Ignite Healthcare Network’s 2023 program, which concluded last week with a pitch competition. Ignite helps female healthcare founders to connect with mentors and other industry experts that will help them navigate the health tech ecosystem. Doyle was one of nine finalists, but did not place in the top three. But she says the program has helped prepare her for success nonetheless.

“In our world, you’re always pitching,” she admits.

The next steps for Partum include a 2024 rife with expansion. Because building relationships with insurance happens on a state-by-state basis, the company will be able to help women around Texas soon after the company is comfortably established in Houston. The Dallas-Fort Worth area will likely be first, followed by Austin and San Antonio.

“We know there’s a huge gap in access to care that may mean evolving a little bit and reaching out across the state,” Doyle says.

Last month, the Texas Health and Human Services Commission reported that 90 percent of the state’s pregnancy-related deaths are preventable. With access to care like what Partum provides, those complications could become a thing of the past.

University of Houston lines up entrepreneurship course featuring Taylor Swift's billion-dollar career

Cougar Red (Taylor's Version)

By any measure, Taylor Swift put on a masterclass with her Eras Tour this year — her Houston stop was a study in three-hours of pop-culture-perfect brand execution and fan frenzy.

Now, University of Houston is taking Tay studies to the next level with a new biz class.

Appropriately dubbed “The Entrepreneurial Genius of Taylor Swift,” the new class is part of the curriculum at coming to the C. T. Bauer College of Business at the University of Houston next spring. Swfities who’re super “ready for it,” however, can get a jump on enrollment now.

Study “the 1” at a No. 1 institution

Though Swifties and Tay (and Travis) fiends will surely soak up every class hour, the program isn’t just for fans, the prof notes in a press statement. And Bauer College offers serious cred for current and new students, as its Wolff Center for Entrepreneurship has long ranked No. 1 in the U.S.

“You definitely don’t have to be a hardcore fan — a Swiftie — to learn and appreciate the entrepreneurial genius that has made Taylor Swift an international phenomenon,” notes Kelly McCormick, the Professor of Practice leading the course, citing Swift’s expertise in marketing, fan engagement, community building, and brand strategies.

Don’t hate, hate, hate, hate, hate on this Tay tutorial

Sure, Swift haters night hate on a Taylor course. But before they do, they should consider that at age 33, Swift boasts an estimated net worth of $1 billion, according to Forbes. And her aforementioned Eras Tour? Swift earned more than $780 million on the U.S. leg alone this year on the tour, which — by current estimates — cues her up to become the highest-grossing female touring artist of all time.

Her Eras Tour concert film also just became the highest-grossing concert film in North America, raking between $95 million to $97 million in ticket sales during its opening weekend — alone.

Taylor Swift Houston 2023 Eras Tour
Swift can flex a $1 billion net worth, per Forbes. Photo by Marco Torres/Marco from Houston


And then of course, her music acumen and savvy. In 2021, Swift smartly re-recorded a version of her album Fearless and launched a series of releases of her back catalog, in order to secure ownership of her first six albums.That move came after the masters (the original recordings) sold for a reported $300 million in 2019.

Here in Houston, as CultureMap reported, the Post-Tay Effect (we’re making that a thing) had a lasting economic effect, notbaly for areas pet and food nonprofits.

Hardcore business aside, the class Still, the course will be Taylor-made for Swifties. McCormick, who also serves as managing director for the university’s startup accelerator RED Labs, has themed each session around a different album — or Era, obvi for fans — of Swift’s career.

What to expect on the “mornin' of your very first day”

So, when students take a deep breath and walk through the door of their very first day (obligatory “Fifteen,” callout) they will score friendship bracelet gifts — a huge Swiftie phenomenon — and will be treated to surprise songs during breaks and even Easter eggs hidden in class content. (That’s a clever nod to Swift, who regularly hides clues, callbacks, and “oh yeaaahhhh” moments for fans in her music videos, album artwork, and social media posts).

As for the Tay inspo, McCormick says she has been a Swift fan since the early days of mega-hits “Our Song” and “Love Story.” But like so many who were blown away by the sheer Tay Machine during the Houston Eras Tour stop in April, the professor quickly noted entrepreneurship lessons to be learned over Swift’s in her 17-year career.

Taylor Swift Houston
The professor says Swift's dazzling Eras Tour stop in Houston inspired the class. Photo: Bob Levey/Getty Images/Taylor Swift Twitter


“I saw the show and loved it,” McCormick adds. “And I realized I actually didn’t know that much about her career. I became absolutely enamored basically overnight and started getting into her whole discography. Taylor is truly impressive!”

She added: “Never have I ever — like ever — been so engrossed in someone’s career after so little time.” (Should anyone doubt all the Tay references, McCormick’s “never have I ever — like ever” comments is shoutout to Swift’s most popular singles, “We Are Never Ever Getting Back Together.” Very clever.)

Travis-Tay included?

But perhaps the top Tay lesson is how to ensure satisfied customers.

“The number one business lesson students can learn from Taylor is the way she treats her fans,” McCormick notes. “She is beloved because she truly does so much to make sure they are happy, appreciated and feel like they are important to her. If every company acted that way about their customers — they’d have way more customers.”

Oh, and, no word — and we didn’t ask, for the record — if Kansas City Chiefs tight end/Swift squeeze Travis Kelce is part of the curriculum. Also no word if, to quote “Fifteen,” students will “sit in class next to a redhead named Abigail.”

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This article originally ran on CultureMap.