Every million-dollar company begins in the same place: with an idea.
However, at some point, every startup needs more than just a good business idea and hard work. Eventually, you’re going to need some funding. OK — a lot of funding.
If you’re in the startup phase and looking to raise some funding, there are a few key ways to do so:
- Bootstrap
- Join a startup incubator
- Take out a loan
- Do a round of fundraising
- Do peer funding or crowdfunding
In this article, we’ll walk you through eight of the best ways to fund your startup, how to manage them, and how to decide which is best for your growing business.
The four key elements of fundraising
Before you decide on a funding option that will work for your startup, you need to consider four key elements of fundraising:
- What the funding is for
- How much funding you need
- How much risk you can tolerate
- Where the money should come from
What the funding is for
Deciding what exactly the funding will be used for will help shape your decisions around what type of funding you go after and how much you’ll need.
Also, pretty much anyone who invests in your startup will want to know this, too. Whether you go after a loan, venture capitalists, crowdfunding, or something else, you need to figure out — and be able to clearly communicate — how you’ll use the money to grow your business.
At this stage, building a detailed business plan, or a business model, can help you visualize and communicate how you’re going to allocate upcoming funds.
How much funding you need
Once you know what you need funding for, you’ll be able to better understand exactly how much you need. You may be thinking, “Well, the more the merrier, right?”
But with fundraising, having a specific number in mind is crucial.
Aiming for a target amount of funds raised shows that you know how you’re going to allocate those funds. It also helps you know where to look for funding. After all, you’re going to need a different approach to raising $10,000 compared to raising $100,000.
But how do you figure out this number?
Back to your business plan. A good business plan will help you consider goals, market factors, planned products and services, and more, which will allow you to create a detailed forecast for financial needs. For example, common startup costs include things like:
- Conducting initial research and determining product-market fit
- Legal fees for incorporating your business entity
- Office space, furniture, and other overhead
- Initial inventory investments
- Staff salaries or other resource investments for product development
- Tech stack and software fees
Once you’ve figured out what you need now to meet your business goals, you can estimate a target number for your current round of funding.
Risk appetite
An important (but sometimes undervalued) consideration is how much risk you’re willing to take as you fund your new startup.
Of course, every startup by nature involves some risks. But different types of funding involve different kinds of risk. For example, a loan from your rich uncle may be less risky financially than taking out a loan from a bank. However, it introduces more personal risk to your relationship with your uncle — and your family more widely.
Bank loans can come with high interest rates, but taking venture capital funding (interest-free!) usually involves giving up equity in your business. This reduces the amount of control you have over how your company operates and grows in the future.
What level of risk is acceptable, and what kinds of risks are you comfortable taking?
That’s a question you have to answer for yourself.
Figuring this out early on will make it easier to raise the right types of funding for your business and goals as you go.
Funding source
Finally, you’ll need to decide where the funding will come from. At this point, if you’ve determined:
- What the funding is for
- How much you need right now
- Your level of risk tolerance
You should have no problem sorting through options and finding the best funding sources for your needs and goals.
In the rest of this article, we’ll go through some of the main startup financing sources you can use, and give you some parameters for deciding which ones are right for your startup.
Best startup funding options
Remember: There isn’t a right or wrong way to fund a startup — just what’s right for your startup at this current moment.
Here are your main options to choose from.
1. Bootstrapping
Especially in the early stages, the most common sources for business financing are probably right in front of you: that is, with your friends, family, and your own funds.
Bootstrapping refers to growing your startup with personal savings, or with personal loans from friends and family. This is great for the early stages, when you might just have an idea and won’t be able to get external investments. It’s also great for startups with low capital requirements.
Pros:
✅ Gives you complete control over business operations
✅ Can be easier and faster to raise funds
✅ Can move quickly if you have enough personal savings
Cons:
❌ Financing is limited to your own or your family’s resources
❌ Can jeopardize your financial stability or personal relationships
❌ Usually not a long-term solution
2. Startup incubators
Startup incubator programs — sometimes called accelerator programs — provide structure and support to help launch and grow new startups. Generally, incubators offer mentorship, community, funding, resources, physical workspaces, and more. Startups may stay in the incubator program for anywhere from nine months to five years.
You’ll find several startup incubators available, depending on your business type, location, and other factors.
Several successful Bubble apps got their runway in a startup accelerator or bootcamp, including Blubinder and CircleHome. The training and funding of an accelerator, combined with the fast development option of a no-code platform like Bubble work together perfectly to get startups off the ground faster.
Pros:
✅ Funding is combined with mentorship, training, and guidance to give your startup holistic support.
✅ Can be an easier way to raise money for early-stage startups.
✅ Pre-seed accelerator funding is typically between $25,000–$150,000.
Cons:
❌ It can be difficult to get into some accelerators.
❌ The time commitment of some accelerators can be really high.
❌ Accelerator funding can require you to give away more business equity (5–10%) than you may want to early on.
3. Small business loans
A small business loan is another common startup financing option. Obviously, the big downside with a loan is that you have to pay it back. In contrast, many other fundraising options offer you cash in exchange for equity in your business.
Like personal loans, small business loans are based on your business credit, so you’ll need to have good credit to qualify. Loans can also vary widely in amounts and interest rates. One of the most common types is an SBA (Small Business Administration) loan.
Compared to traditional business loans or a personal loan, an SBA loan is more competitive and harder to apply for. However, they have longer repayment periods and lower interest rates, which can make them a better choice for startups and small business owners. You can also apply for an SBA microloan, which is for amounts up to $50,000. This is another great option for very early startups.
The SBA’s Lender Match tool is a great way to quickly find the right loans for your business type and stage.
Pros:
✅ Can get a loan for significant amounts of money, from $10,000–$500,000+
✅ Often easier to apply for a loan than other funding options
✅ Doesn’t require you to give away equity in your business
✅ Loans from a bank have more flexibility and (often) less risk than personal loans
Cons:
❌ Business loans can be risky if your startup doesn’t work out
❌ Can come with extremely high interest rates (up to 20%)
❌ You’ll typically need to make a down payment to qualify
4. Venture capital
Raising venture capital is one of the most common stages of fundraising for startups. Venture capitalists are private investors often backed by a venture capital firm. They invest in new companies and startups in exchange for equity.
If your business is successful, your investors will receive an equity payout of some kind. If your startup isn’t, investors generally don’t receive anything, so it’s not as risky as a loan (which has to be repaid in any case). However, venture capitalists typically gravitate toward companies with high growth potential. You’ll need to have a solid proof-of-concept, a minimum viable product (MVP), or something similar to demonstrate your startup’s promise.
The first round of VC funding (typically known as Series A funding) happens after the pre-seed and seed funding rounds, once a company is ready to take their product to development and launch. Series A funding typically raises between $2 million–$15 million.
Series B funding takes place once you have a clear product and user base. It exists to help a startup take their product to a larger audience, and typically raises up to $50 million.
Pros:
✅ One of the best ways to raise large amounts of funding and take your startup to the next level.
✅ Has clear stages and a clear trajectory for startups
✅ Offers visibility, networking, and often business guidance
Cons:
❌ Requires you to trade a significant amount of equity (typically 10%–30% in Series A)
❌ Requires strong traction, growth, and product-market fit before fundraising
❌ Comes with high expectations of growth and development
❌ Can be difficult to obtain, especially for women and minority-led startups
5. Peer funding
Peer funding, or peer-to-peer lending, is a more flexible option. It connects you to other individual lenders to borrow money for your startup and business goals.
Usually, peer lending is facilitated through an online platform that connects individual borrowers to lenders. Peer loans can be of a greater value than many small business loans. They’re also easier to apply for and receive, especially if you don’t have a good credit score.
As such, this can be an easier and more accessible way to fund your business for early-stage startups. However, peer funding still requires monthly payments, and interest rates can vary.
Pros:
✅ More flexible and can offer more funding than traditional business or SBA loans.
✅ Can be more accessible for early-stage startups than other funding types.
✅ Can be a good alternative to bootstrapping if you don’t have personal savings to pull from.
Cons:
❌ Interest rates and monthly payments vary in affordability.
❌ You may have to pay additional fees to the lending platform in addition to interest and principal.
❌ Peer lending can come with higher risks for your credit if you can’t repay the loan on time.
6. Crowdfunding
Crowdfunding is similar to peer-to-peer lending, but typically happens on a larger scale. That is, more individuals back your product or idea for a smaller amount, giving you the capital you need to make your idea a reality.
Crowdfunding works especially well for physical products. In this case, interested buyers can back your product, allowing you to make it a reality and then provide them with the product and/or additional bonuses or rewards once your product takes off.
Kickstarter and Indiegogo are the most popular crowdfunding platforms. These platforms can give visibility (and in some cases even virality) to your idea, help you find interested backers, and facilitate your fundraising.
Once you reach your fundraising goals, you’ll receive the funds and then can make your product or idea a reality. It can even help you raise more than your current goals, as popular Kickstarter products like the Everyday Backpack and Exploding Kittens card games prove. (Each of these raised millions of dollars in their fundraising campaigns).
Pros:
✅ Great way to raise any amount of money, from tens of thousands to millions of dollars.
✅ Low-risk way of fundraising, as you can tie fundraising amounts directly to your product
✅ Good way to grow your audience and visibility alongside raising money
✅ Doesn’t require you to release equity in your company or pay back loans
Cons:
❌ Doesn’t work for every business model and startup
❌ Not a guaranteed way of raising funds (often, you only receive the funds raised if you meet your goal)
❌ Best for early-stage or pre-launch startups that are consumer-focused
❌ Far more likely to be successful if you’ve already built an audience
7. Small business grants
A small business grant is another good option for businesses who already have some traction and development in place to further their growth and scale up.
Unlike traditional loans, grants are typically provided by the government or other large organizations and don’t need to be repaid. They also don’t require you to provide equity in your business, which allows you to maintain more control as you grow.
Grants can come in various forms as well — from cash to tax credits to capital needs and more. The main downside is that they’re often quite limited in terms of who qualifies for them, what amount of funding is available, and how competitive they are.
For example, many small business grants are specifically related to growing or expanding your team (creating new jobs), or improving sustainability. They may also be limited to nonprofits, underserved business owners, or community-focused small businesses.
However, if that’s you, go after it! It can be worth the time and effort required to apply in exchange for essentially free money.
Pros:
✅ Low-risk investment for your business that doesn’t have to be repaid
✅ Can be a great way to get funds for non-traditional businesses who aren’t served by VC or other funding options
Cons:
❌ Usually have to use the funds for very specific purposes
❌ Can be difficult and time-consuming to qualify for and apply for
❌ Usually more limited funds available
8. Trading equity
Finally, a less traditional way of scaling your startup is by trading equity for services. That is, if you don’t have the cash to pay for developers, product leads, business advice, or other team roles, you may be able to trade equity in your company for some services as you scale up.
While this isn’t a long-term solution for growing your team, it can be a viable option for high-growth startups to get things off the ground early on, even without a large cash reserve.
Pros:
✅ You can access services and resources you may not otherwise have cash for.
✅ Great in the early stages when you’re still developing an MVP or product-market fit
Cons:
❌ Trading away significant amounts of equity in your business can reduce your control.
❌ Not as flexible of a funding option
Which startup funding option should you choose?
Your choice of fundraising options depends on many factors, such as:
- The size and scope of your goals
- Your industry and business type
- The quantity and quality of your current competition
- Your current business stage
- Projected revenue and growth speed
- Credit scores, history of loan repayment, and other financial factors
For example, if you’re launching a SaaS product that has the opportunity to grow your startup into a large tech company, you’re looking at enormous costs, high competition, sizable overhead, and potentially fast growth. This means you’ll need some significant financial (and human!) resources. In this case, you’d be well-suited for an accelerator, venture capital fundraising, and small business loans.
However, if you’re a solopreneur opening a small local business or an online shop, you’ll have significantly lower overhead and revenue potential. In this case, you should look at lower-risk and smaller-value funding options, such as crowdfunding, bootstrapping, or a small business grant.
The following chart can help you make sense of which funding options might be best for your business right now:
Build your MVP on Bubble for free
Whether you’re bootstrapping your startup or have already joined a startup accelerator or raised some VC funding, Bubble is here to bring your app or product to life quicker and more affordably than before.
While traditional coding development for new apps can often cost hundreds of thousands of dollars and take months to complete. Founders using Bubble can build and launch apps for far less, and in a matter of weeks.
Don’t believe us? Just ask Liesl Leach from Blubinder.
She had raised $650,000 to develop and launch the first version of Blubinder, but she didn’t have the financial runway or time for traditional development. Instead, she brought on a single Bubble Developer and launched Blubinder on Bubble in just a few weeks — leaving her plenty of runway to grow and expand the product.
Build an MVP, iterate, launch, and grow — and do it all faster on Bubble. Even better: You can build on Bubble for free until you’re ready to launch.
