Alternative Forms of Capital: Here’s What Every Entrepreneur Needs to Know

By Simran Setia

Posted on July 31, 2017

We live in a world that is highly appreciative of entrepreneurship. There are many difficulties that the young entrepreneurs face as they try to get funding on their own. Most young entrepreneurs don’t have enough credit history to reassure banks about their financial condition. Millennials are smart enough to look for the alternative sources of capital and funding, the ones that cut out the banks entirely. There are many alternative sources of funding growing in popularity but the pros and cons need to be evaluated. Here is all the information you need to know about the alternative financing:

1. Specialty finance and lending platforms

Traditional methods of finance have held themselves as they are for long. These models are hindering the progress rather than helping. There has been a rise in specialty finance and lending platforms that can help the business and even provide the businesses with the capital they require. The goal must be to create a new way to provide financing to a rapidly growing industry. There is an important need to understand this. This will help in removing lengthy and costly process of raising the venture capital and find funding as soon as possible.

2. Startup accelerators and incubators

The two above-stated things are often confused with each other but they are two different things. They are far from same. Accelerators are fixed term and mentorship driven culminating into a graduation day. It can be termed as a learning place where a group of people or companies gather for a set period of time to learn from experienced professionals.

Startup incubators are companies that offer resources to the startups to aid them in their growth. This includes everything like office space to advice to networking. These programs have a longer gestation period which can be anywhere between 1 to 5 years.

3. Crowdfunding

This works wonders for companies looking to offer some products or services. This allows entrepreneurs to sidestep having to relinquish angel investors, accelerators and incubators. Crowdfunding can prove to be a boon for the companies looking to only secure funds. But the need is to present the product well and offer incentives for the ones investing.

This is the best time to be an entrepreneur. There are ample of resources for help and to get the funding a business to prosper. If you have enough of funding along with a cool mind and some coffee, you’ll have a pretty solid chance at success.

This article has been contributed by Simran Setia, Tax Expert- LegalRaasta

Alternative Forms of Capital: Here’s What Every Entrepreneur Needs to Know