Banker's Guide to New Small Business Finance: Venture Deals, Crowdfunding, Private Equity, and Technology, + Website

Chapter 9Other Innovative Funding Sources on the Rise

The business finance innovations described in earlier chapters all involved the explicit use of proprietary technology to provide more efficiencies or to scale financing distribution in order to simplify the process of connecting capital to capital users. Actually, innovation does not always require technology, but rather can come in more basic forms, such as strategic ideas and methodologies to navigate capital to the same destination.

And so with financing schemes, a number of good ideas have emerged over the past few years that have offered different, untraditional paths to connect investors and business owners with capital financing. Some of these ideas use plenty of technology to facilitate their ideas, but the distinction here from those other platforms is that the technology is merely the vessel, not the innovation.

At the heart of the companies described in this chapter is this: They have taken an innovative approach to the rules or markets; exploited other weaknesses or vulnerabilities or declined opportunities; taken advantage of tax laws; or deployed technology in a different way. Like the digital innovators, some of the fundamental tenets of the trade have been bent or broken to facilitate these ideas, but none of these particular financing companies innovated strictly with technology so much as they did with finance.

FACTORING IN THE DIGITAL AGE

Factoring is one of the oldest financing vehicles, developed to ...