What alternatives are there to financing your business?
Many aspiring entrepreneurs have a innovative idea / concept for their startup but lack the funding to get the idea off the ground. Brand new businesses are often turned down when applying for bank loans due to banks not seeing it as a lucrative venture. Even if you manage to establish your business, finding capital can still be hard to secure.
Before you look into the different types of financing, you should read our previous article about the concept of alternative finance for small businesses to educate yourself on the basics so you can really grasp these different types of financing.
So what are your options left after the traditional bank loan? Here at Crowdholding, we have gathered 5 of the newest alternative finance options that could allow your startup to not just be a pipe dream but a reality.
ICO (inital Coin Offering)
Initial Coin Offerings (ICO’s) are the newest way to raise capital for startups, This year alone technological based startup companies have raised nearly 1.3 billion dollars this year alone through ICO’s, Bancor managed to raise $153 million alone. ICO’s are a mixture of an IPO (Initial Public Offering) and Crowdfunding.
The only drawback is that it is for startups who are looking to create a cryptocurrency, so if your company is not involved in that sphere it is better to look for another alternative. If you wish to know more about ICO’s, we recently wrote an article about ICO’s and if you should invest.
Peer to Peer lending
Another reasonably new way to secure finance is through Peer to Peer lending. P2P companies started around 12 years ago and now have broken into the many industries such as journalism, the fashion industry and even into the financial sector.
The general concept is that everyone gets a better deal compared to a traditional bank loan, lenders get a higher rate of interest compared to a savings account in a bank and borrowers pay less than they would on a bank loan.
There are many big websites such as Funding Circle, Lending club and Streetshares. This way is also advantageous because you can receive the financial backing in a shorter time without having to fill out a mountain of paperwork.
The concept of Crowdfunding is also one of the buzzwords for raising capital such sites as Kickstarter and Indiegogo. This works by promoting your product / concept and allowing anyone to invest. This could be thousands of people all pledging 10 dollars each. This type of fund raising is better for a new product / idea than a second or third round of investment.
The main advantage is that these sites are very popular, and instead of searching for that one large investment you have multiple sources who actually are interested in your product.
Make sure to read all the details though as different crowdfunding websites have different payment processing fees to require the business to reach their goal before they can receive any of the money raised.
Here is a link with some great tips on how to make a successful Crowdfunding campaign.
If you are willing to sacrifice some equity in your startup, angel investors could be the source of income for you. There have been numerous success stories from angel investing such as Whatsapp, Uber and Facebook.
Angel Investors invest in the early stages of a startup in exchange for a percentage of your company. The one main advantage (apart from the cash of course) is that usually angel investors are passionate about your project and may have some insight into your industry field, making them a powerful ally. Also if the investor is a well renowned professional in his / her field it can add credibility to your startup.
Venture capital are similar to angel investors, but they are an institution (a group of investors) rather than a single one. They fund that startups that are considered have high risk potential and a high growth rate.
The main advantage to this source of financing is similar to Angel investors, they usually focus on certain industries meaning that you can receive a wealth of knowledge and experience as well as capital. The downside is that usually they will expect a large percent of equity, usually around 25–30%.
All of these alternative ways of financing can be extremely fruitful, but it is about finding the right one for your company. Click on our article about “raising capital, and preserving equity” if you need more ideas on which direction to go.
CrowdholdingCrowdholding connects the crowd with entrepreneurs, allowing you to give feedback and ideas for a future share.
ITF excelled with Crowd Wisdom
TailoredInk ICO Community Management
IronX ICO Social Media Marketing
Aerum ICO Influencer Marketing
Jarvis built with the crowd
ySign engaged the blockchain crowd
6 Ways to Earn Crypto For Free
Common Mistakes When Investing in ICOs
Connectjob joins Crowdholding
Week in a Nutshell & Smart Contract
Opporty joins Crowdholding
Getting to Know our Users
SmartCash joins Crowdholding
Bitcoen.io joins Crowdholding
What is a Smart Contract?
How to Create an ICO - Part 3 - Marketing
How to Create an ICO - Part 2 - The Two "W's"
How to create an ICO - Part 1 - The building blocks
Invest Time, Not Money
What alternatives are there to financing your business?
What is an ICO? And should you invest?
Blockchain technology : changing the world of business silently
Crowdholding’s Pre-Sale — A Case Study
How to become a Crowdholding supporter: Part 3 exchanging ETH for YUPIES
China ban on ICO’s : Not all Doom and Gloom?
How to become a Crowdholding supporter: Part 2 Buy some Ether (ETH) on Coinbase
How to create a task on Crowdholding
How to become a Crowdholding supporter: Part 1 creating a Ethereum wallet on MyEtherWallet.com
How to create a project on Crowdholding
Cryptocurrencies and their value
What is Crowdholding?
What is a White Paper? And do you need one?
What can CEO’s / Entrepreneurs learn from athletes?
How to start my own business? Part 3. Validating Your Business Idea
Top 10 career mistakes to avoid
6 Benefits of a Sharing Economy
How to start my own business? Part 2. Factory for ideas
Startup Promotion and Content Marketing Strategy
How to start my own business? Part 1. Five simple rules
The Year Capitalism could have Changed
Robots & Work: Jack Ma Predicted The Emergence of Robot-CEO
Startup Psychology: Why Entrepreneurs will save the planet?
Billionaire's School: it's hard to be the first
10 interesting sport startups that will rule 2017
30 reasons to be an online entrepreneur
How to chose a dating site?
You should know this striking marketing trend
10 reasons to join Crowdholding if you are a student
How did 67,000 people create the first crowdsourced melody?
Launch a startup with a partner, never alone.
Collaboration solves education problems with flying colors!
Hollywood movie from your smartphone?
Design your room the way you want it!
Hi, Your business is now a unicorn!
Hi, You're Hired!
Don't want to change the world for the better? You can stop reading now.
Sharing Economy is not a niche, it's the future
📊 What if karma was 🆚 worth something? 🤜🤛
Raise capital, preserve equity
5 marketing strategies for successful contact with Millennials
Why 75% of new products are doomed to fail?
Small Business Staffing Opportunities
What are Crowd Currencies?
Mass Collaboration leads to unprecedented innovation
Alternative Finance: Equity vs Crowdshare Crowdfunding
Co-creation between the crowd and small businesses
THE RELATIONSHIP BETWEEN IT AND CO CREATION
Corruption on Wall Street: The Stolen American Dream
To own or to rent, trends in sharing economics
Crowdsourcing a girlfriend
CROWDSOURCING IN FASHION
CrowdSourcing Trends 2020
Peer-to-peer journalism: What and how?
Peer-to-peer in the fashion industry
The Peer-To-Peer Marketplace Revolution
The relationship between Co-creation and Innovation
CROWDFUNDING AND VIDEOGAMES
NON-EQUITY CROWDFUNDING CHANGING FASHION BUSINESS
Revenue-sharing vs Reward-based crowdfunding
Blockchain application in Media industry
Blockchain Technology & Crowdfunding
Creative marketing through Crowdsourced Content
JOBS OF THE FUTURE
Alternative finance for small businesses
WHY CO-CREATE? – A message to the Crowd
Think Tanks and Benefits
Empowering Global Citizens to Improve Education
THE EVIL WALL STREET
Co-creation in Tech
Co-creation and Innovation
WHY CO-CREATE? - Benefits for Small Businesses
Co-creation in the Fashion Industry
Crowdholding vs Wallstreet
Make a brand your brand
The way you earn rewards has changed!
The task has changed to a new rewarding structure. Please read the following rules:
Voters get 35% of the reward
Commenters still receive the majority of 65% of the reward weight, while voters 35%.
You receive only 7 upvotes and must vote what you think are the best answers
You now have a limited amount of upvotes. You won’t see the other user votes until the task expires. If you vote the top half comments you will receive a portion of the 35%.
Top 50% upvoted comments get bigger share
Our algorithm gives top 50% upvoted comments more rewards than the bottom 50% comments.
Give me an example with numbers
Upvoters get 35 % of the reward.
65 % goes to the commentors.
Half of the reward is gained from bottom 1/2.
Upvoters get nothing
1/2 of the reward pool for this segmentis distributed among top 1/2
There is a task with 1000 Reward.
Let’s assume Top 1/2 recevies 70% of all upvotes.
Bottom gets 30 %. But because half of the reward goes to Top 1/2 that makes the final numbers more like Top 1/2 gets 85% (55.25% for commentors, 29,75% for upvoters) and bottom gets 15 % of the final reward.
If there’s 100 upvotes:
1 upvote that upvotes a comment in Top is worth around 12 Yups (circa 8 goes to commentor, 4 goes to upvoter)
1 upvote that upvotes a comment in Bottom is worth 5 (All goes to commentor).
Reminder about our Moderation
If you upvote a comment that’s reported as Spam or comment that should not be rewarded (eg. “Good job” comments) you will lose your right to be rewarded for this task.
We hope you like this new system and it brings you lots of fruitful discussions and reward you fairly.
Do you still have questions? Read more detailed explanation at our helpdesk
All the best,
Your Crowdholding Team