Why are Bootstrapped Startups Opting for Non-Dilutive Funding?
The journey of entrepreneurship - is that of grit, perseverance, and an undeterred growth mindset. An important job description of a startup founder is making decisions about how to finance growth while swimming effortlessly through the ebbs and flows of everyday business.
If you have worked hard to set up your company, especially when betting your own money for its success, you may be twice as motivated to see your startup scale. And everyone knows that without the right money coming in, navigating growth can be hard.
However, bootstrapping can only take you so far. At some point, delaying fundraising can put a pin in your growth and stall the vision you have for your startup. With a host of options available today, choosing the right funding option can make or break your business in the long run.
What’s The Way Ahead ?
As a startup founder, turning to venture capital investment can seem attractive – not just for the volume of money, but also because of the validation that it comes with. Yet, VC funding right off the bat isn’t the best option for every startup.
For one, cutting an equity deal means you lose a chunk of ownership. This means allowing a bunch of investors on your board to dictate terms on how you should run your company. While guidance can be excellent for new entrepreneurs, it can throw you off track if your vision doesn’t align with your investors’. Plus, VC funding in the current economic milieu is hard to come by.
Indian Private Equity and Venture Capital funding fell by almost 77% in the first quarter of 2023. Deal pipelines have slowed because of the macroeconomic conditions and the general unease to fund startups that don’t show promise.
If you’re turning to traditional funding sources, the challenges are different. Companies seeking funding through banks, for instance, may notice that these institutions are wary of new business models, particularly those with SaaS or software solutions.
This is where the alternative route of non-dilutive funding comes as a boon for startups. Non-dilutive funding means turning to sources of capital that do not require giving up equity in a company.
If you are bootstrapped, this can be an attractive option, as it allows you to raise funds without diluting ownership and control. There are several non-dilutive funding options to explore such as grants, subsidies, crowdfunding, and Recur Club financing.
Why Turn to Non-Dilutive Funding for Your Bootstrapped Startup?
Firstly, if your company isn’t making a profit, then equity funding can be hard to come by. With non-dilutive funding options such as recur club financing or grants, you don’t have to be profitable. Grants don’t have to be repaid while Recur Club financing is based on your revenue or cash flows, not profit.
Moreover, the earlier in your startup journey you raise equity money, the more it will cost you in later stages in terms of dilution. Even a few months of putting off equity funding can make a huge difference.
There are other advantages to seeking non-dilutive funding. If you have a better growth story to tell when you raise equity, it will be at better terms and a higher valuation. Early stage startups might find it difficult to get an attractive valuation. Choosing to go the non-dilutive route can help you scale and pitch better to investors at a later stage.
Scott Dettmer, a lawyer at Gunderson Dettmer, who advises founders of tech startups in Silicon Valley for almost three decades now, told TechCrunch, “If you can put off raising venture money, that lets you raise money on more attractive terms.”
All of these factors combined can make non-dilutive funding a great option if you’re bootstrapped.
Should You Choose Recur Club Financing?
Recur Club financing is an entrepreneur-friendly debt option, where you not only get to keep ownership of your company for longer, but the terms of repayment are usually better too. Repayment comes with a level of flexibility that won’t stall your growth.
If you have working capital needs or want to fund a new idea without diluting equity, then Recur Club financing can be ideal for you. It is sector and size agnostic, which means anyone with a steady revenue stream can access this route. Plus, funding is directly linked to your growth. The streamlined funding process usually requires no collateral and can be obtained quickly.
Plus, Recur Club financing sets you up to access better funding in the future. Venture capitalists and angel investors who see that you have already gotten capital and utilized that effectively to fuel growth are more likely to give you a better valuation and deal.
If you are looking to get non-dilutive financing for your startup, we at Recur Club provide an easy, swift and fast solution for your funding needs!
