Chat with us, powered by LiveChat

Top 6 non-bank financing methods for startups

Top 6 non-bank financing methods for startups_By GCC Business Finance

All startups need some sort of funding. Money is crucial in helping to get the business off the ground and to keep it running through the initial months where losses are to be expected. However, not everyone has suitable personal savings to plow into their idea, and not everyone wants to or can access typical banking small business loans. If this applies to you, and you’re looking to raise new capital for your startup, here are our top 6 recommended non-bank financing methods.

1. Crowdfunding

Crowdfunding has grown increasingly popular in recent years. It allows you to access all of the funds you potentially need to create and build your idea, usually based on nothing more than some initial prototypes. Just be sure to choose the right Crowdfunding site for you. Some, for example, will only allow you to withdraw money if the full amount is raised, while others charge exorbitant payment processing fees.

2. Venture capital

Venture capital is most frequently given to companies that are high risk, but who offer potentially massive returns on an investment. To access venture capital, you will need to seek out venture capital firms who have millions to invest in multiple companies every year. Just be aware that venture capitalists will expect to see you scale your company rapidly and want their shares to multiply in value within 5 to 10 years.

3. Contests

Contests are a popular way for new startups to gain access to essential capital, without needing to give up shares in their company. You enter a contest and then compete against other businesses, until eventually, one company comes out on top. Contests are great even if you are yet to produce anything and still have little more than a team and an idea.

4. Grants

Grants are often available to startups either through government-run schemes or via private bodies. The grants available to your startup will depend on a lot of factors, such as your industry, what it is you’re looking to achieve and how your product or service might benefit the greater good of the area you live in.

5. Product pre-sale

Product pre-sales are an increasingly popular way for startups to raise huge sums of capital for their company. If you believe your business has the potential to grow massively in value, then you likely want to avoid giving away equity very early on. Pre-sales allow you to create mockups and explanations of what your product does and why people would want to buy it.

If you then offer some sort of promotional, pre-sale rates, you could garner hundreds of thousands of dollars without giving away any stake in your company. You are then left able to build the product and become profitable from the outset.

6. Angel investors

Angel investors are similar to venture capitalists in the sense that they offer you money in exchange for shares in your company. However, there are 2 key differences. Firstly, angel investors are individuals, not firms. Secondly, the amount of money you could expect to raise is not usually as high as venture capital, where investments regularly exceed $1 million.

Here at GCC Business Finance, we are experts in providing non-bank financing solutions for SMEs all across Australia. We understand the need for fast access to capital, but also appreciate the downsides associated with typical banking loan agreements. So, if you’re looking to raise money for your startup and need a helping hand to guide you, please do contact our friendly team today.