Appendix 1: Glossary of Terms
Finding and obtaining adequate amounts of capital to start or grow your business are challenges faced by all but theluckiest few entrepreneurs. Depending on where you are in the entrepreneurial path, you may know all too well thatfundraising is as important, if not more important, as any other aspect of your business, and just how difﬁcult thatprocess can be.Businesses that are well thought out, well planned, well researched, and steadfastly managed by competent businessprofessionals would seem like sure bets in the fundraising game. Unfortunately, while these businesses may haveadvantages in potentially acquiring funds,
there really is no sure thing in the world of business
. This is perhaps more truein fundraising than in any other aspect of business, be it marketing, production, sourcing, or strategic planning.The current economic climate has contributed to the tightening of liquidity markets, key sources of capital for small businesses. Short term loans, critical to many small and medium sized businesses needing money to cover payroll,inventory, or raw materials before invoices come in, all but dried up in the recession of 2008-2009. Venture Capitalinvestments similarly dropped off, as did the level of Angel investing. So what is a small business owner or aspiringentrepreneur to do?
Thriving in a Challenging Environment
the Advantages of Going Green
You may be starting an environmentally friendly, socially responsible business, but odds are, those providing youwith funding will still want to see a solid return on investment for their outlay and won’t simply fund you out of charity. You may have some advantages over a traditional business in raising capital, if you are able to frame it right,and if you are lucky enough to ﬁnd the people who want to invest in green. Here, we present the advantages
and,yes, challenges--of raising capital for a small green business so that you can play to your strengths, and avoid com-mon pitfalls faced by other green entrepreneurs.
This document will take you through the various kinds of funding available to you, how you might go about acquir-ing them, and what the pros and cons are of each approach. In part 1, we discuss the beneﬁts and drawbacks of rais-ing money as a green entrepreneur. In part 2, we discuss some of the potential startup methodologies and entitytypes your business may take, and how that may affect your fundraising. For instance, it may make sense to startyour business as a co-op, in which case, the fundraising will be quite different than if you start on your own, whichwill be quite different than if you buy into an existing business. In part 3, we discuss some key terminology anddeﬁnitions of various funding sources and analyze current trends in each. We also discuss the beneﬁts and draw- backs of each approach, and some strategic approaches to acquiring money through these sources. The documentcloses with a glossary of relevant terms for your reference, both current and future.