20 Alternatives of Raising Funds from Investors

As you know men, money and material are three important resources of any business. If there is any shortage in any one of them, it could make your business suffer. But handling these shortages is a part of every business life cycle. Now you know that every business goes through this. And by keeping all these things with you, you could also make your business life amazing and beautiful.

So, do you want to start a new business? Or wanted to expand an existing business? Both of these decisions have one concern in common. And that concern is nothing but strategizing a decision on ‘how to raise funds’. There is nothing to worry about. We are here to provide you 20 alternatives of raising funds from investors. You could choose among them as per your business’ needs. Let us see the complete story on the topic- 20 Alternatives of Raising Funds from Investors.

1) Get some support from crowd funding
2) Have a mentor in form of Venture Capital
3) Advertise it through Initial Public Offer
4) Win contests for your business plan
5) Organize events to attract sponsors
6) Take help from Business Incubator
7) Banks loans were always there for you
8) NBFCs also have attractive funding options
9) Attract risk-averse investors by Debt Mutual Funds
10) Team up with similar business ideas
11) Tap for Private Equity firms
12) You can also get some peer funding
13) Issue debentures to raise investments
14) Make them owners by giving secured preference shares
15) Take help of some exciting government schemes
16) Make your suppliers ‘The Partners’
17) Give ESOP instead of salaries to your employees
18) Business credit cards when there is urgent need of funds
19) Make an agreement for ‘Line of Credit’
20) Angels investors could become your healers

1) Get some support from crowd funding

Even small contributions from large number of people can solve your funding problem. If you have an ‘out of the box’ plan for your business, then you can expect huge funds in the form of crowd funding. This form of funding contains low risk yet you can earn high returns out of it. But you can promise your investors some returns in future.


Also Read: List of 11 Best Crowdfunding Platforms for Startups


2) Have a mentor in form of Venture Capital

Venture capitalists look for those businesses that have attained some revenue stability. If you also fall in this ambit, then try to attract a venture capitalist for having investments. These investments generally contains high risk-return ratio. They can also give management support for your business. So, your business would get two things at one go, i.e. adequate funds and a reliable mentor.

3) Advertise it through Initial Public Offer

It is a platform where you can raise funds through public at large. First you have to get underwriter who will decide where to list your shares. Generally IPOs have high credibility and trust factor play a major role here. Investors also know that for issuing IPOs, you must have gone through various compliances. This could also help in building your brand image among investors.

Steps of Fund Raising
Steps of Fund Raising

4) Win contests for your business plan

Is your business plan unique? Do you expect high growth in future as well? Then it is time to take part in some contests and tell the world about your business plans. With this, your business plan would get enough recognition among peers. Also you could win funds in the form of prizes.

5) Organize events to attract sponsors

Events could become major platform to attract investors for your business. It would be a costly affair initially but you can expect various capitalists out from there. You just need to display your business plan effectively. With the help of this, you would make various connections for your future business endeavours as well.

6) Take help from Business Incubator

Business incubator are specially designed to help start up businesses to sustain and grow. They could provide you all necessary resources which are essential to run any business. There would be an immense support system for your business to prosper. Try to reach a suitable incubator which matches with your business interest.


Also Read: Top 10 Startup Incubation Centers In India


7) Banks loans were always there for you

You have plenty of options in the form of bank loans. For this you need to display your effective business module. They would also enquire about your future growth prospects. Adherences to compliances were major hurdle for getting bank loans. But now governments are also helping to reduce the burden of compliances.

8) NBFCs also have attractive funding options

Non banking finance institutions have attractive funding options for your business. The process is more or less similar to bank loans. But the major difference is they come up with lower interest rates. As interest rates are low, they come up with high risks as well. There is often high liquidity crunch in NBFCs which make it riskier form of fund raising.

9) Attract risk-averse investors by Debt Mutual Funds

There are some investors who are risk averse but want some good returns out of their investments. You can target them by providing debt mutual funds. Debt mutual funds have stable returns and there is no loss of capital as well. Execute your business plan in an effective manner so that you could give your cost of capital on time.


Also Read: List of Top Mutual Fund Startups in India | (2020)


10) Team up with similar business ideas

It is always good to make a team instead of going solely in the battle field. Try to find those who also have similar business ideas like yours. You would get more resources in form of men, material and money than earlier. Also the risk factor could be divided among partners as per ratio of investment.

11) Tap for Private Equity firms

These firms could provide you funds in return of ownership. They usually look for high prospering businesses. You could reach out to them by giving your future plan of action. Try to turn your USP work into your favour because these firms could make your business grow. Mark your presence among these powerful business houses and give your business a new outlook.

12) You can also get some peer funding

Peer funding is always being a trusted form of raising funds. You can deliver your attractive future plans to your friends, family, colleagues, etc.

Also there would be low operational cost associated with this form of fund raising. But you can invite your peers to become partners. This is the most suitable form of investment which has high return with low risks.

13) Issue debentures to raise investments

Importance of Fund Raising

Debentures provide fixed rate of interest to investors. They would give you long term investments.  For this you have to ensure stable earning to provide fixed rate of return to investors. This is not as high risky as equities. But on the other hand, this is one of the most secure forms of investments for investors.

14) Make them owners by giving secured preference shares

There are some investors who want to become owners but they adhere to risk of becoming owner. For investors, this could be a mixture of having debentures and equity at one basket. It is an attractive form of raising funds which provide stable returns with an ownership status.

15) Take help of some exciting government schemes

Nowadays government is also coming up with amazing plans to support businesses. They know that these businesses help to generate employability in nation. Try to reach to those plans of government which can support your business endeavours. Also the cost of capital is very less in this alternative.

16) Make your suppliers ‘The Partners’

You usually need huge funds to make payment to your suppliers. But what if you make those suppliers as your partners? This could become a great venture where there is no operational risk for your business. Also you would get reliable and trustworthy supplier who is directly associated with the profits of your business.

17) Give ESOP instead of salaries to your employees

Salary expense is one of the major expenses of any business. You could save this expense by giving employees ‘Employee Stock Option Plan’. Transform them as owners and they would also get motivated to work in a more effective manner. This would be a low cost of capital for your business.

18) Business credit cards when there is urgent need of funds

These credit cards are workable when there is urgent need of funds. This form of funding is usually having high cost of capital. But when there is urgency no cost is a high cost. You just have to be little careful while using them because it could make your business debt trap.

19) Make an agreement for ‘Line of Credit’

Line of Credit is generally an agreement with banking institutions. It could provide you funds until the maximum limit is reached. You can borrow money at anytime and from anywhere which make this source of funding as flexible one. But there is a condition that you have to adhere as per the agreements.

20) Angels investors could become your healers

Nowadays there are many professionals who look for various investment opportunities. These professionals usually have affluent earnings. What they want is to earn extra profits from those earnings. They merely look for start-ups who have high potential of growth. Try to reach out to them and make sure you deliver your future plans in an effective manner.


Also Read: List Of Angel Investors In Bangalore


Conclusion

Raising funds is an important task for every business. For you also, it could be a major decision for your business. But you have to keep one thing in mind that you should not depend on one alternative only. Take alternatives as eggs and see this. Remember if you move ahead with only one egg in your basket, there is a possibility that one egg may broke down in middle of the road. In this situation, you won’t have any other alternative to go ahead. So, try to have bundles of eggs in your basket. If one egg is broken, then there would be not much concern for your business. And you can move ahead with rest of them.

Author image

About Yash Gupta