I can't remember the last time I heard someone from the start up community saying they were trying to get funding from a bank. The perception is that banks don't lend, banks don't understand tech and banks make you jump through hoops wearing your best suit.
One thing the online options for raising money have in common is that they all are transparent about the deals they do i.e. Seedrs will tell you a company gave away 5 percent for 100k or 10 percent for 22k. The headline stats from Kickstarter are eye catching $858 million pledged, 51,241 successfully funded projects.
1. Crowd funding
Kickstarter constantly update their data and the amount of completed projects would scare most banks. They are upfront about their fee, it is 5 percent if you are successful.There are many other crowd funding options now that Kickstarter have blazed a trail. They include crowdcube and Seedrs. Transparency and building a community are the main benefits the negatives are that you might have a large number of investors.
To get the most out of crowd funding upload a slick video with a business idea which is on trend. This will get people engaged. In London and Dublin cycling is the new boom sport and cycling related projects are proving popular with funders. Misguided perception is that only small raises are done via crowdfunding, recently £1.9 million was raised, which crowdcube claim is the crowd funding record for UK. The biggest from the states seems to be pebble smart watch which raised $10,266,844 pledged by 68,928 people in a 2012 kickstarter campaign.
2. Peer to peer lending
This also includes the online business loans without banks. Also known as social lending or lend-to-save. Peer-to-peer lending works by individual savers and borrowers coming together to get better rates. Low interest rates are driving people away from saving they are looking at options which will provide them a better return. Two companies making strides in this space are thincats and zopa
3. You can go international
Start-up Chile offers budding entrepreneurs $40k of equity free seed capital plus a temporary 1 year visa. This is the best international offer I have come across but the various other well known incubators around the world will also fund you with more strings attached i.e. Y Combinator, Techstars, Wayra.
4.Take on a co founder who will invest
If you find someone, this is an ideal route to take. It means the person who supplies the funds is also going to help you bring the start up to reality. Of the Inc top 500 businesses, 28 percent received seed funding from a co-founder.
5. Borrow against assets
borro.com is one of many emerging digital pawn shops. This can be a useful way of handing over possessions you don't need week to week. You will get cash in return. Once you have the money to pay back what you borrowed borro.com will return the asset.
Lastly competitions can net you cash. Probably best not to be an integral part of your funding strategy but can be a useful bonus. Especially if you are the lucky winner and beat the 1075 to 1 odds and win million pound start up. Last week the web summit ran 2 x competitions last one of which netted the winners €25k. Be careful to choose the ones with actual cash prizes rather than prizes in the form of 'services' and good luck.