7 Non-Venture Capital Financing Options for Startups


It isn’t uncommon for entrepreneurs and small business owners to seek venture capitalists to fund their business. Venture capital (VC) is an institutional or private investment made into new businesses. However, if you are not interested in going this route, here are 7 non-venture capital financing options for entrepreneurs.

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If you are not interested in going the VC route then explore different funding sources such as a line of credit to grow your company and before raising equity capital. 8 such options include:

1. Accelerator Programs And Fellowships

Accelerator programs and fellowships help in supporting entrepreneurs in growing their businesses and increase their likelihood of success. Many fellowships and accelerator programs offer mentors and access to funds. Another opportunity that these present are pitch competitions which are a great source to win money that you can invest in your small business.

2. Peer-to-Peer Networks

There are numerous marketplace lending options that have good business term loans and personal lines of credit. This is a good option to consider if you have a good credit rating as you will get lower rates and more advantageous payback options. You can even reach out to friends, family and business associates for alternative sources of funding.

Recommended reading: How To Finance Your Startup

3. Purchase Order Financing

If you can leverage contracts, purchase orders and memorandums of understanding (MOUs), you can access debt financing at a cheaper rate. This would be perfect if you can secure purchase orders or legally binding agreements to pay for products or services rendered. Working with Local Community Development Financial Institutions (CDFIs) will enable you to get this funding at lower interest rates than traditional loans.

4. Small Business Loans

Talk to your local small business centres and Small Business Administration branch to see what is available in the way of small business loans. They are quite entrepreneur-friendly, moreover, they are more lenient in their qualifying standards, which is great for small businesses that are just starting off.

5. Pricing And Purchasing Structure: The Subscription Model

A subscription model allows you to charge up front for an increased access to your products or services. You can charge your customers through a subscription model and use the sales to develop other offerings while being able to cover the initial costs. You can have a quarterly, monthly, biannual or annual subscription plans.

6. Line of Credit

Applying for a personal line of credit for business is a another option as you have to pay interest on only what you use. You can grow the business without having to give away your equity or control of the business. A line of credit acts as an emergency fund as well.

7. Low-Interest Government Loans and Grants

Reach out to the local government offices like your Local Enterprise Office, Údarás na Gaeltachta, chambers of commerce, and community and economic development offices that may have Leader funding. These bodies may fund you if you can show them that you can create jobs and make money.

So the good news is that there are other options other than VC investment to find out about. Use your networks and contacts to explore some of these options. 

Over to you now. How did you go about looking at financing options when you started your business? Tell us in the comments below.

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