Access to capital is one of the biggest challenges that early-stage entrepreneurs face. It was my own challenges with accessing capital and my prior success raising $20 million from family offices that led me to create the Wealth Stack Veteran Capital Access Platform. While venture capital is often seen as the only way to get the funding you need to succeed, in reality it is one of many ways to secure the capital needed to scale your business off the ground. In this blog, we will explore 10 non-venture capital ways to access capital for early-stage entrepreneurs.
- Angel Investors: Angel investors are high net worth individuals who provide seed capital to startups in exchange for an equity stake in the company. They are often willing to take on more risk than traditional investors and can provide valuable mentorship and connections in addition to funding.
- Getting Customers to Pay in Advance: One way to secure capital without giving up equity is to get customers to pay in advance. This can be done by offering early bird discounts or pre-ordering products before they are released.
- Niche Crowdfunding Platforms: Platforms like Local Vest and 10-K Project specialize in crowdfunding campaigns for Veteran and Black founders respectively. These niche market platforms can be a great way to access funding from investors who are passionate about a particular industry or cause.
- ARR Based Loans: Digital platforms like Pipe offer loans based on a company's annual recurring revenue (ARR) rather than traditional metrics like credit score. Pipe starts lending at ~$20K of monthly recurring revenue and will lend up to $500K. This can be a great option for early-stage companies with a strong revenue stream but little collateral. A number of Wealth Stack's Hedge Fund and specialty finance partners also offer ARR based loans in the $5 million and up range.
- Loan Aggregators: Lendio is an example of a loan aggregator that helps small business owners find loans from a variety of lenders. These aggregators can save entrepreneurs time and effort by providing a single platform to compare and apply for loans. www.wealtstack.us/lendio
- SBA Loans: The Small Business Administration (SBA) offers a variety of loan programs for small businesses, including those that are just starting out. These loans are backed by the government and can offer more favorable terms than traditional bank loans.
- Family Offices: Family offices are private wealth management firms that manage the financial affairs of ultra-high net worth families. They can be a great source of capital for early-stage entrepreneurs who are able to build relationships with these firms. This is where I have had the most success in raising capital historically because of the increased flexibility and interest in bespoke structured deals.
- Private Credit: Private credit funds provide debt financing to companies that do not qualify for traditional bank loans. These funds are often willing to take on more risk and can offer flexible terms to early-stage companies.
- Contract Financing: Contract financing involves using a contract with a customer or vendor as collateral for a loan. This can be a great option for companies that have a strong sales pipeline but are waiting for payment from customers.
- Receivable Factoring: Factoring companies buy a company's outstanding invoices at a discount in exchange for immediate cash. This can be a great way to access capital quickly without giving up equity.
In conclusion, there are many non-venture capital ways for early-stage entrepreneurs to access the capital needed to grow their businesses. At Wealth Stack we have deep relationships with over 30 different types of capital from angel investors and niche crowdfunding platforms to SBA loans and contract financing, there are options available for entrepreneurs at every stage of their journey through Wealth Stack’s Veteran Capital Access Platform. The depth and diversity of the Wealth Stack network makes us the ideal partner to source the capital that you need to grow. By exploring these alternatives, entrepreneurs can find the right funding solution to help them achieve their business goals