One of the difficult parts of starting a new business is raising capital to get it off the ground. Writing a pitch, finding investors and presenting your business to them can be a time-consuming and emotionally draining process, especially since so many of those pitches are likely to end in rejection.
Most entrepreneurs don’t have the luxury of time to wait for the right investor deal, so some of them end up exploring other avenues for funding their startup. If you’re thinking about straying from the investor path, the members of Forbes Business Council share 13 creative alternatives to explore. Follow their recommendations to find a new path to business financing.
1. Get Paying Customers
The best way to fund a startup is by convincing your customers to pay! This not only ensures profitability on a foundational level, but also ensures sustainable growth and market validation. By purchasing your product, your customers are investing in their ease and your sustainability. – Aaditya Damani, Autosys Industrial Solutions Private Limited
2. Create A Minimum Viable Product
Don’t raise money. So many of the companies I talk to don’t actually need money; they just need to start small to test the market. Look for a way to create a minimum viable product that can start generating revenue, reinvest that revenue and grow from there. Then, once there is revenue coming in and the business shows that it has a viable market, raising funds through any channel is much easier. – Peter Strack, The Strack Group
3. Consider Trajectory Growth Funding
Established businesses with sales history need to be creative in their financial stack and consider debt and alternatives that a track record of cash flow allows. Talk to VCs offering less percent and work with alternative sources who will like the longer runway. The most interesting option is trajectory growth funding that requires no equity and is unsecured; you just need good fundamentals and cash flow. – Guy Kurlandski, Liquidity Capital
4. Spread Out Your Funding Sources
Don’t just go to one source to raise capital; you can spread those investments along several different avenues. An individual, private investor, funding institution and banks are all prospects. You will want to learn to grow your business very quickly. Crowdfunding may also be an option as it can allow you to prove an idea without all of the initial financial risks. – Jennifer Sheets, MasterStaff, Inc.
5. Put Your Own Money Into It
Put some of your own skin in the game if you can by partially funding your vision yourself. If you are confident enough in your business to put down some of your own capital, others will more likely follow suit! – Kyle Mitnick, Advertise Purple
6. Launch A Crowdfunding Campaign
Don’t ignore crowdfunding. There are 300 million Americans out there with cash to invest and they’re looking for something different than traditional stocks, bonds and savings accounts. Tap into the masses to fund your dream! – Peter Vogel, Leafwire
7. Partner With Someone Else
Partnering shifts you from raising of capital to selling a dream. Find one person who can be a silent partner. Paint your dream, your passion and your conviction, and allow them to align with your dream. This shifts your cold calls to simply getting passionate about your venture and allowing another with funds to join in your excitement. – Blake Templeton, Boron Capital
8. Explore Pension Funds And Grants
Raising capital is one of the most difficult parts of getting your business going. Depending on the type of business you’re in and where you’re at in the process, you can explore alternative funding options like pension funds, family offices and grants. The key is listening carefully to the investors and creating solutions that satisfy them. – Walter Schindler, Transformation, LLC
9. Have A Business Plan
I tell young entrepreneurs to create a stellar business plan, pro forma and investor presentation on Prezi. Friends and family are the most likely to invest in startups, and that will help you get to the proof of concept stage. Once the model is proven, additional funding rounds can commence at higher valuations. – Michael Mayes, Quantum 9 Inc.
10. Collaborate With Nonprofits
Get involved with nonprofits in your industry and collaborate with them to drive real outcomes for their goals. Present your results to the board of the nonprofit who are usually people leading prominent companies. If they’re happy with what you do, they’ll naturally want to know you better. When it’s time to raise funds, you can tell those connections. – Hayk Saakian, Logic Inbound
11. Take On Gifts Or Debt
As an investor, I respect savvy entrepreneurs who obtained money as gifts from friends, raised money via crowdfunding or took loans/convertible debt before exploring equity financing. You are more attractive to investors if you have done one or more of the above and financed some growth yourself. Attempt these before seeking investment to show you know how to inspire money and run lean. – Pradeep Aradhya, Novus Laurus
12. Look At Owner Financing
I would suggest looking at owner financing if you are purchasing a business from another company. It is an opportunity to make an agreement without taking out a loan from the bank and possibly at a lower interest rate. – Dr. Jaquel Patterson, Fairfield Family Health
13. Invest In Marketing First
There may be many people with good business ideas looking for money and there are many talented people chasing investors. One must consider using resources on marketing first before meeting investors. Also, look for talent that works on similar projects as yourself. Maybe you can recruit at the same time. – Fariba Rahimi, Fariba AS