Alternative Investments

Higher Risk, Higher Reward — If You Know What You’re Doing

Traditional investments give your capital safety and structure. But if you’re looking for growth beyond slow compounding, it might be time to explore what’s outside the mainstream.

Alternative investments are gaining traction with SMEs — especially those sitting on cash reserves, planning for long-term growth, or diversifying beyond business operations.

But here’s the truth: they’re not for everyone. You need to know what fits, what to avoid, and how to manage exposure.

This chapter helps you understand the most relevant alternative investments for SMEs and when they actually make sense.

What Counts as an “Alternative” Investment?

Anything outside of stocks, bonds, fixed deposits, and traditional real estate.

Common options:

• Startups or private equity
• Venture debt or convertible notes
• Peer-to-peer lending
• Crypto assets
• Collectibles or luxury assets
• Crowdfunding platforms
• Hedge funds or REITs (in some contexts)

The appeal? Higher potential returns and access to markets or strategies traditional tools don’t cover.

The risk? Lower liquidity, less regulation, higher volatility.

1. Startup Investing / Angel Investing

Why it’s attractive:

• High upside potential if the startup grows or exits
• Early access to innovation
• Strategic benefits (partnerships, joint ventures)

Risk:

• High failure rate (most startups don’t return capital)
• Long lock-in period (5–10 years)

When it fits:

• You understand the founder/industry
• You’re allocating <10% of investable capital
• You can afford to lose the amount you invest

2. Private Lending / Venture Debt

What it is:
Lending capital directly to other SMEs, often via platforms or private arrangements, with interest.

Pros:

• Fixed income potential
• Shorter-term than equity investing
• More control over terms

Cons:

• Default risk
• Illiquidity
• Requires due diligence

Use case:
You want to earn a yield but aren’t comfortable with equity-style risk.

3. Cryptocurrency and Digital Assets

Why it attracts:

• Potential for explosive returns
• Decentralized structure
• Access to global, 24/7 markets

But let’s be real:

• Price swings are extreme
• Regulation is unclear in many MENA jurisdictions
• Many coins and tokens are speculative at best

How to approach it smartly:

• Use only surplus capital
• Stick to major assets (BTC, ETH)
• Avoid hype-driven “altcoins” unless you’re deep in research
• Store securely, track for tax and audit purposes

4. Alternative Real Estate or REITs

Options include:

• Commercial properties
• Warehouses, co-working spaces
• Fractional real estate (via platforms)
• Real Estate Investment Trusts (REITs)

Why it fits:

• Steady income potential
• Asset-backed
• Accessible via platforms with smaller capital

Risk to manage:

• Market timing
• Location exposure
• Liquidity constraints

5. Crowdfunding and Online Investment Platforms

What it is:
Equity or lending-based investments into startups, projects, or real estate via regulated platforms.

Pros:

• Low minimum capital
• Diversification across many small bets
• Transparent terms (when using licensed platforms)

Cons:

• Platform risk
• Lower influence or control
• Often long-term commitments

When it fits:
You’re exploring alternatives, want exposure, but don’t want to make big single bets.

Should SMEs Even Invest in Alternatives?

Yes — if:

• Core operations are financially stable
• Cash flow is consistent
• Risk appetite is clear
• You’ve already invested in traditional assets or operational growth

No — if:

• You’re tight on liquidity
• You’re making emotional or hype-based decisions
• You can’t explain the asset to someone else clearly

How CrossVal Helps You Manage Alternative Investments with Control

Most SMEs avoid alternatives not because they’re risky — but because they’re hard to manage.

With CrossVal, you can:

• Create dedicated budgets for alternative asset exposure
• Track cash locked into long-term bets vs liquid funds
• Monitor return potential vs actual performance
• Sync investment allocations with broader forecasts
• Assign owner responsibility to someone in the team
• Create separate workspaces for each company, entity, or division

You bring the curiosity — CrossVal brings the structure.

Final Thoughts

Alternative investments aren’t magic bullets. But for SMEs ready to diversify — and willing to learn — they offer upside that traditional channels might not match.

Start slow. Allocate small. Track everything. And know exactly what outcome you’re aiming for.

Next up: Chapter 6 – Top Funding Sources for SME Investments
We’ll explore how to fund your investments — from retained earnings and bootstrapping to debt, equity, and government programs.