Entrepreneurs may have many reasons for not seeking out investors for their startups, not the least of which is the desire to maintain total control of their companies. New entrepreneurs may not realize that other options are available that can be just as effective for getting a business started without all the cons of an investor.
Below, a panel of Young Entrepreneur Council leaders list some alternatives to investors that entrepreneurs can explore in order to fund their projects. Whether you choose to pursue one or a combination of these suggestions, effective fundraising solutions exist for every type of business.
9 Fundraising Alternatives to Investors
- Family and friends.
- Local government aid.
- Business partnerships.
- Pitch competitions.
- Business incubators and accelerators.
- Nonprofit partnerships.
- Social media.
1. Family and Friends
You might not think family and friends are suitable if you need a lot of money, but they could be, and it never hurts to try. Plus, you already have the built-in fact that these folks know you and probably believe in you, which are two major hurdles when seeking funds from investors. They may also know of people who might be willing to invest more significantly. —Andrew Schrage, Money Crashers Personal Finance
If you choose to crowdfund your business, consider researching alternatives to Kickstarter or Patreon. For example, Wefunder allows for equity crowdfunding. You gain more access to capital without the barriers that may come with poor credit. If you have a product or service that provides a healthy return on investment, consider such a platform. —Duran Inci, Optimum7
3. Local Government Aid
Most local governments have economic development money from the state or federal government that is specifically designated for startups and small businesses. In most cases, the money is in the form of low-interest loans with favorable terms, but it may also be in the form of a grant, which you don’t have to pay back. Start with your local chamber of commerce as a resource and be persistent. —Kristopher Brian Jones, LSEO.com
4. Business Partnerships
In my experience, partnering with other businesses is a great way to raise money and establish stability. You can find plenty of medium to large businesses that like to partner with smaller brands. Look for a company that complements your product or service and has a solid reputation, and you might just find an investor and business partner. —John Turner, SeedProd LLC
5. Pitch Competitions
Pitch competitions are a great way to get exposure, potential investors and funding. Winners of these competitions often get direct exposure to investors and can also secure a PR contract, legal services and even a speaker agency contract. Many pitch competitions also offer equity-free cash prizes. —Saana Azzam, MENA Speakers
6. Business Incubators and Accelerators
One way to raise money is to consider business incubators and accelerators, depending on your goals. If you’re in an early stage, incubators can help nurture and assist your business by offering you a solid foundation. If you’ve already left that stage, it’s time to look for accelerators. They can help you speed up your growth by taking a giant leap. —Josh Kohlbach, Wholesale Suite
7. Nonprofit Partnerships
Getting involved with nonprofits in your industry and helping them fulfill their goals can help you get noticed by board members who often help fund prominent companies. If you can present outstanding results, they will most likely want to learn more about your business ventures. Creating new relationships based on trust will make raising funds for your company easier. —Benjamin Rojas, All in One SEO
Look for grants that your project may qualify for. Universities and nonprofits offer grants for startups that meet certain criteria. The Small Business Administration also has grants for businesses involved in scientific research. Consider all the ways your business can help people and then research organizations that promote these types of solutions. —Kalin Kassabov, ProTexting
9. Social Media
A great way to raise money is to spread the news about your company on social media. You need to build your profile online and keep publishing content. Build a following and talk about how your product can help people. If you get enough attention, you’ll be surprised by offers for investments from unexpected places. —Blair Williams, MemberPress