All the ways to raise capital for a startup, summarized


There's more than one way to raise money for your startup. Venture capital gets a lot of attention, but there are tons of other avenues too. Let's explore them!

Now that you have a sense of how much money you need to raise, we've come to the point you’ve been waiting for: trying to determine how exactly you’re going to get the money you need to start or grow your business. Where is it going to come from? 

While venture capital is often seen as the pinnacle of startup funding stories, they fund less than 1 percent of all companies in the U.S. So let’s understand all your options because there are many ways to raise capital for your startup. 

Raising capital for your startup


Self-funding remains one of the most popular ways to fund a business, with most if not all companies either self-funding through the entire lifespan of a business or starting out initially self-funded. It’s certainly easier with businesses that have lower startup costs, but there are many cases as well in which founders saved a substantial enough amount of money in order to fully self-fund their business. Some, like Steve Jobs, sold their assets to self-fund (in Steve’s case, his $1350 Volkswagen van).

Examples of companies that were self-funded: GitHub, Apple, Lynda, Spanx, Dyson, Microsoft

Friends and family

Usually the first place many people tend to go once they’ve exhausted personal funds is with the people they already know. Mixing personal relationships with business can get sticky, and this method does count on having a network of people around you who are willing to invest in you. But if it’s an option, it can work out well as it has for many founders.

Examples of companies funded by family and friends: Shopify, Tory Burch, Subway, Vera Wang

Small business loans

Small business loans from governments and banks usually come with better interest rates than personal loans or maxing out your credit cards in order to start a business. They also afford the opportunity to fund a business without having to give up equity. All you have to do is prepare a business plan and ensure you can pay back the loan. 

Examples of companies that were funded by business loans: Starbucks, Paul Mitchell


Platforms like Kickstarter are now the go-to spot for certain types of businesses to launch products with a presale model. Crowdfunding in general works particularly well for consumer-based product businesses or media-related businesses such as video games or publishing ventures. In recent years, blockchain technology has risen as an alternative crowdfunding option.

Examples of companies that were crowdfunded: Cards Against Humanity, Exploding Kittens, Oculus, Allbirds


Startup accelerators, such as 500 Startups and Y Combinator, typically combine capital with mentorship programs and network access that not only serve to fund businesses but to truly get them off the ground and on the right foot. Some accelerator programs are free and some come with a fee, some take equity and some don’t. Most, though, have some sort of application process. There are also in–person accelerator programs, but many are conducted completely virtually as well. 

Examples of companies funded by accelerators: Stripe, Doordash, Twitch, Canva, Reddit

Product sales

It should go without saying that any business should be making sales. There are very few exceptions to this since the whole premise of a business is that it generates revenue. No product sales = no product market fit. But, there are businesses that take this to a whole other level by funding their business through product sales, either before they’ve landed on the right product or through pre-launching a product and generating sales before the product is even ready (kind of like crowdfunding, but without a specific funding target).

Examples of companies funded by product sales: Scentsy, Airbnb, LootCrate

Angel investors

Angel investors are people who typically fund early stage startups in exchange for equity. They typically focus on high-growth business models and companies and tend to have both business experience and money, since they’re investing their own money, and sometimes act as advisors to the businesses they invest in. 

Examples of companies funded by angel investors: Square, Spotify, DocuSign, Coinbase

Venture capital

Venture capital firms, similar to angel investors, typically fund early stage startups in exchange for equity, and also similarly, typically focus on high-growth business models. However, rather than invest their own money, venture capitalists are employees of companies (VC firms) that invest other people’s money. Angel investors also tend to be individual people, whereas VC firms are groups of people whose entire job it is to make money by finding and supporting the companies that they choose to invest in. They typically have an investment thesis in order to find founders and companies that match their values and market expertise.  

A very important note on venture capital: in 2021, less than 2 percent of all venture capital went to companies founded by women, as just one glaring example of how bias impacts who gets investment dollars. If you’re a founder that has been marginalized and left out of venture capital dollars and conversations, you may be tempted to write off this funding method altogether and go straight to other sources. But, if venture capital is the right method for you and you don’t pursue it just because it feels out of reach, that number won’t change and it’s important for venture capital dollars to flow into all kinds of companies founded by all kinds of people. Look for VC firms that match your values; they exist. 

Examples of companies funded by venture capital: Juul, SpaceX, Unity, Peloton, Almanac

How to choose the right method for your business

How much money you need to start your business is one deciding factor for choosing the right fundraising method, as well as your industry. Venture capital firms typically fund software products as they’re highly scalable, whereas crowdfunding companies typically fund creative projects. That’s not always the case and there aren’t hard rules—there are successful software companies funded every other way, too—but you’ll definitely want to look at what other businesses in your industry have done to raise capital. You may even find potential sources of funding this way.

That said, most businesses can and often do combine multiple methods. In fact, most of the examples in the above list fall into at least two categories of funding, some three or more (like Airbnb, which was self-funded, then funded by product sales, then by an accelerator, then by venture capital). 

You can bootstrap first to give yourself freedom and flexibility while working to achieve product-market fit. That doesn’t mean you can’t pursue venture capital later on. In fact, a proven track record of existing revenue can make companies more appealing to venture capital firms when all the business needs is cash to scale.

If you’re unsure, the best thing to do is to determine your financing needs, understand your TAM and your market. 

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