How to raise money: it’s a journey not an event

The only thing that would make an investment like this less risky is collateral, not worse potential returns.

Microsoft was not high risk (as noted by Gates), and it provided a return that is so large it might as well be off the scale for the purposes of this discussion (their market cap was recently up around $1.3 trillion; Gates will have pulled over a hundred billion dollars out of his ownership in the company over ~45-50 years).

- Microsoft had very high margins from the beginning. They operated thin and were very cash rich within the first few years. Just a few years in, Gates had Microsoft hoarding multiple $500,000 government bonds (~$1.5m in today's money) from accumulated profit, because they were already very profitable (there is a story about the secretary misplacing one of these bonds).

- Microsoft was founded for relatively little money - $10,000 - and with zero outside VC money. Gates & Allen came up with that capital from working various industry jobs in the prior years.

- They nailed down a serious customer (MITS) and then founded a company, rather than the other way around (found a company and then try to find business for it).

- Sales went from $16,000 in 1976 (first months of operation), to $8m for 1980, and $17m in 1981 with 40 employees ($17m is $50m inflation adjusted). Three years in they were gushing cash.

Because low risk companies are always relatively easy to copy, so as soon as you see any success you'll have clones pop up and take market share, which will lower your returns.

Any business where the risk is low is, by definition, not doing anything other people can't do. If only you can do it then you have to build the market yourself, which would represent a high risk.

In the US if you are expanding your shop to a few sites, or doing a "concept" (e.g. Jamba juice) you can look for some professional money, as I mentioned, but the process is just as painful as a bank.

All those people want you to put some of your own money in to show that you are committed. The money being lent out is often a large proportion of the lender's capital.

For PE (incl VC) the partners typically put up only a nominal amount of capital -- they are investing their customers' money. So requiring an investment by the company founders is an unnecessary requirement that could be a barrier to a good deal happening. The positive side of this is that these investors are more concerned with upside than downside. Investors in Europe and Australia are mostly more worried about losing money than gaining some.

As an alternative, the US has many types of government small business loan programs (meant to stimulate industry), along with private sector versions, for just about every business type and scenario. Some are easy to get (typically smaller), most require that you go through annoying and drawn-out processes to get. You have to deal with the bureaucracy basically.

The US has an agency called the Small Business Administration, which works with lenders and provides loan backing. One of their requirements in their loan programs is that you demonstrate an inability to get lending from any other financial lender.

Then there are small business grants that federal and state government provide, again to stimulate industry.

I suspect most developed economies have versions of these types of programs.