Sell a stake in your product run, not your company

Raising capital is hard, especially if you are not running an exciting hi-tech company.

The property development industry often use an interesting model. They take a lot of the risks with setting up the business and getting approvals from government, but they minimise their financial risk on the construction by pre-selling, otherwise known as selling off the plan. Basically, they are raising equity funds to meet the requirements of their construction loan.

If you are selling software, you can pre-sell licences for a 3 year period, or for free updates. That way your foundation customers get something out of the deal.

For manufacturing industries your biggest upfront cost and risk is the finalisation of the design and the tooling costs for large runs. There are trends right now to sell a limited production run to cover those costs. For example, you could provide the first 100 customers with the product at cost, and their orders have effectively paid for the tooling costs, so that future production runs are cheap.

Anyway, that’s the principal. You will likely have to spend quite a bit of time and money on prototypes and functional websites, etc. however, this is a great way to grow that shares the risks and minimises your need to sell equity in your own company.