3 Alternatives to Venture Capital Funding for Small Businesses

Once a niche corner of business, the startup world has become steadily more mainstream. With the popularity of shows like Shark Tank on the rise, many people dream of catching the attention of a wealthy venture capitalist in order to get funding for their small business.

However, venture capital only serves a small subset of businesses: high-growth enterprises, usually technology-based, that can expect to provide a 10x return in just a few years. For every business eligible for venture capital, there are 200 more that are not a fit.

Fortunately, there are many alternatives to venture capital. Here are three alternatives  to venture capital you can leverage to obtain funding for your business, whether to get it off the ground or take it to the next level.

Grants

Small business grants are the closest thing to free money you can find. Although you have to “spend” time and energy on applications, if you win one, you receive a no-strings-attached check to use for developing your business. You do not have to pay the money back, and the grant-distributing organization does not receive an ownership stake in your company.

A downside of grants is that competition is extremely high. You will probably get dozens more rejections than acceptances. But as long as you stay persistent, choose competitions aligned with your mission, and share your story in a compelling way, you’ll get to the “yes” you need.

Want to improve your chances of winning? Click here for some of our top tips on winning small business grants.

Loans

A loan is money that you borrow for a certain period of time. It must be repaid with interest, usually in monthly increments.

While loans may seem intimidating, they are simply a tool that can be used to advance your business. Just ensure that your financial projections are realistic, the interest rate is fair, and you borrow within your means.

SBA Loans

 

The U.S. Small Business Administration (SBA) offers loans with highly favorable terms: low interest rates, low initial payments, and other beneficial elements.

However, as with any government entity, there are mountains of paperwork involved in applying. The process is extremely long, and there may be many constraints about what the funds may be used for.

Pitch Competitions

In a pitch competition, you give a verbal or recorded pitch about your business. Time limits range from as long as three minutes to ten minutes, but typically average around 4-5 minutes. Prizes can range from $1,000 to $1,000,000 or higher. They are often attached to accelerator programs which train you on how to give effective presentations so you can showcase your business in the best light and have the greatest chance of success.

Like grants, pitch competitions are often highly competitive, requiring applications to participate before you even have the opportunity to go onstage. Whether you win or not, these competitions often provide valuable feedback on your presentation and business model so you can improve for the next pitch.

Want to Connect to $100,000 in Funding?

EnrichHER’s Business Financing Accelerator teaches you how to connect to over $100,000 in funding through small business grants, loans, venture capital, and other untapped sources of funding. You’ll gain access to winning grant templates, office hours with experts who can help you refine your pitch, and road-tested emails with a track record of getting responses from venture capitalists.

Click here to learn more and enroll in the next cohort.

About EnrichHER:

EnrichHER is a financial technology platform that matches revenue-generating companies led by women and founders of color to individual and institutional sources of funding. Since 2017, EnrichHER has deployed upwards of $4 million through its platform and matched business-owners to $13 million in working capital through its Accelerator. By providing capital, coaching, and connections, we are fueling the fastest-growing demographic of business owners. Our network has engaged with over 23,000 advocates through its digital community and in-person activations.

Other Popular Articles from EnrichHER:

5 Tips for Winning Small Business Grants

5 Tips for Winning Pitch Competitions

3 Steps to Getting Funding from Venture Capitalists– Without any Connections



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