How To Gain Alternative Funding

There are many different reasons a business may require extra funding, such as improving your goods or services, investing in new tech, diversifying your business, expanding or even franchising.

Alternative lending is a form of financing that provides funds to businesses and individuals without having to go through a traditional bank. Any funding that isn’t sourced from a mainstream provider such as a bank is classified as alternative funding.

It could even be focused on getting not only extra finance but a business mentor who wants to invest both financial and mental capital.

Types of Alternative Funding include:

-       Peer-to-peer lending

-       Crowdsourced lending

-       Venture capital & angel investment

-       Competitions

-       Grants and government funding

So, how do you get alternative funding for your business? And what do you need to consider or prep for?

There are a few ways you can go to help you get the most from your chosen strategy here. We will briefly dive into some of the matters you should and/or need to consider.

-       Make sure you can articulate your business and ideas. Investors need to understand every area of your business as an opportunity for them to invest in. Take the time to learn how to speak well and describe your business perfectly;

-       Ensure your numbers are squeaky clean as they will be scrutinised;

-       Research is key! What funding will work for you? Where can you source it from? Are you signing up for equity, ROI?

-       Perfect your pitch. Once you have mastered how to speak about your business to a range of potential investors and have the research to back it up, you need to be looking for all opportunities to get that pitch out there;

-       Network, network, network. Everyone knows someone, so keep at it and keep pitching your business. As they say, it’s not what you know, it’s who you know, so reach out and pitch away;

-       Connect with others that have been through the journey of your particular type of funding before, and see what insights they can offer to you;

-       Join groups, networks and platforms that may help you find resources;

-       What’s in your Investment Pack. This may include NDAs, Information Memorandums and/or even initial offers. Please note before these are prepared or given to anyone these need to get prepared/checked by your business lawyers and accountants to ensure they are drafted in a way to avoid potential legal claims against you or unintended consequences risking your business.

Connected with the above point, one of the most important considerations is to not disclose anything, agree to or sign anything, before you have spoken with an experienced business lawyer.

Why? Because disclosing something could not only potentially stop you from being able to get patent protection, (which depending on your business may be an essential thing you need to do to protect yourself and increase value and competitiveness), but could risk your intellectual property or other business assets and value.

Also, an experienced business lawyer may give you guidance on what factors you need to consider in any potential offer you may make or receive. It can be very difficult and costly to try and renegotiate terms that you didn’t realise were very bad because you got too excited with the initial discussions or offers.

In addition to speaking with your business lawyer (book in here if you would like to talk further with one of our specialists) some places to start as you commence this journey:

-       Deloitte’s guide to alternative funding

-       Brisbane Angels connect businesses with their angel investor network

-       Queensland Government Grant Finder

If you want to learn more or are looking for some other ways to kick your business into gear, book a free Discovery Call or Strategy Session with us to discover what’s possible.

Please note that this is a general and brief update, it does not purport to be legal, financial or business advice, nor is this advice specific to your circumstances. Consequently, specific legal advice, and accounting advice from an accounting specialist, for each of your circumstances must be obtained first before taking or not taking any action with respect to this area.