The Various CPG Fundraising Options Explained and Compared

Guest Post: The Kickfurther Team

Today, we're talking about...

Specifically, how to raise them.

Many founders intimately understand the steps they need to take to grow their business. The list of projects may include expanding product lines, hiring additional help, updating equipment, and/or optimizing marketing. The question is, how do you pay for all this stuff? Let's talk about some options.


This is where most businesses start their funding journey and the epitome of “putting your money where your mouth is.” Prior to raising outside funds, the founder puts their own money into the business to prove the idea is viable. This money is low cost and it’s available quickly, but it doesn’t come with any strategic value. 

Credit Card

Getting approved is relatively easy and there’s often an introductory period where the money is “free” (e.g. 0% APR for 12 months). However, this is a dangerous game to play since, once the introductory offer is up, interest rates are 20%+.  This money is not low cost and comes with no strategic value, but it is available quickly

Friends & Family

In tandem with a credit card, this is another early source of funding. Friends & family, usually, are far more generous with their terms and interested in your success. The result is moderately costly since intermingling business and personal relationships can get tricky, and it doesn’t offer much strategic value (unless your rich aunt/uncle is an experienced cpg entrepreneur). However, it’s often available quickly. 


While this can come later on, usually it’s leveraged as part of a launch strategy. Many brands look at companies that have been incredibly successful on Kickstarter or Indiegogo and assume it’s easy to raise $100k+. It is not. Those campaigns are the product of months of hard work, tons of follow ups, PR placement, and, usually, thousands spent on video and other assets to support the campaign. We like to think of this option more like a marketing campaign with an added benefit of pre-sales. The result is money that’s somewhat fast, somewhat cheap, and carries some strategic value. 

Angel Investors

Unless you're friends with one, an angel investor would like to see some proof of concept, prior to investing. They’re savvy, experienced investors who, typically, bring subject-matter expertise to the table. The result is money that's available less quickly and at a higher price, but does come with some strategic value. 

Inventory Financing

In order to finance your inventory, you need to be, well, producing inventory. Therefore this option is only available for businesses who are up and running. It carries with it some pretty nifty benefits. First, you get to set the returns you’ll provide to your backers so the costs make sense for you. Second, you repay the funds as you sell the inventory so there’s strong cash flow alignment. Third, deals get funded, on average, in 1 hour. If you’re like most CPG brands, you pay your suppliers (manufacturers) before you receive revenue from sales so this is a great option. The money is low cost, available quickly, and carries strategic value since the platform enables mission-aligned backers to discover new brands. 

Accounts Receivable Factoring

Similar to inventory financing, your business needs to be producing products/generating revenue. With this option, you’re trading cash in 30+ days (your invoice) and the liability of collecting it, for cash ASAP at a steep discount. Keep in mind that if a large portion of your business is Ecommerce, you would only be able to access factoring capital on your wholesale orders, and only after you deliver them to your buyers. This can leave a painful gap between when you paid your supplier and when your invoices are paid. The result is money that's available quickly but costly and offers no strategic value. 

Venture Capital Investment

Their terms tend to be rigid and they expect big returns. However, they bring savvy, experience, networks, and subject matter expertise to the table. In CPG, typically a business needs at least a few million dollars in sales before VC funding is a viable option. The result is money that is not available quickly and tends to be very expensive but does come with strategic value. 

Bank/Commercial Loans

Historically, banks have been the first place businesses look to for further investment. Due to banks’ strict requirements for securing loans and their low cost of capital, banks can maintain significantly lower rates. The downside is a younger business might not have the history established to secure funding based on traditional underwriting models, and the time between application and receiving funds can take too long. The result is money that is low cost but does not come quickly and offers no strategic value.

For young companies, growth often requires stacking together a number of these sources. As you think about funding options, take time to review the ways each option enables you to scale upward as well as how the costs and structure will impact your bottom line in the short and long term.

Author bio

Kickfurther helps CPG businesses grow faster by funding their inventory and allowing them to pay back later as it sells. Companies selling through any combination of direct-to-consumer, online, wholesale, or retail channels use Kickfurther to fund $20,000-$1,000,000 in inventory they’ll repay on a custom timeline of 1-10 months based on their sales cycles.

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