The main startup funding options are bootstrapping, friends and family, angel investors, accelerators, venture capital, grants, crowdfunding, loans and revenue-based financing. Which one fits depends on your stage, whether you have revenue yet, and how much ownership you are willing to give up.
The first four usually fund the idea and the first product. Venture capital funds fast growth in exchange for equity. Loans and revenue-based financing need revenue, but let you keep the company.
Key Takeaways
- Most young companies fund themselves: in the Federal Reserve’s 2023 Small Business Credit Survey, 28% of startups with employees put in owners’ money in the prior year, and only 3% received any equity investment.
- Angels invested $17.9 billion in 55,346 US companies in 2024, and about 1 in 5 founders who pitched them got funded (22.6%), per the UNH Center for Venture Research.
- Carta’s Q2 2026 medians: a $4.5 million seed round at a $23.9 million post-money valuation (19.4% dilution) and a $14.7 million Series A (18.7% dilution).
- Equity-free options have hard limits: SBA 7(a) loans go up to $5 million, and SBIR Phase I grants up to $323,090 without a waiver (SBA and SBIR.gov, 2026).
- Only 3.4% of companies that raised money through Regulation Crowdfunding later raised venture capital, in the SEC’s 2025 study of 8,492 offerings.
Startup Funding Options Compared
Each option suits a different stage and costs you something different: equity, a personal guarantee, a share of future revenue, or time spent on applications. The sections below explain each one, and the numbers come from the sources linked there.
| Option | Stage it suits | Equity given up | Key number |
|---|---|---|---|
| Bootstrapping | Idea to profitable | None | 28% of startups put in owners’ money (Fed, 2023) |
| Friends and family | Idea, pre-seed | Depends on the deal | 15% of startups borrowed from family or friends (Fed, 2023) |
| Angel investors | Pre-seed, seed | Yes | 22.6% of founders who pitched got funded (UNH, 2024) |
| Accelerators | Pre-seed | Yes | YC invests $500,000; Techstars $220,000 |
| Venture capital | Seed onward | Yes | Median seed $4.5M, Series A $14.7M (Carta, Q2 2026) |
| Grants | R&D before revenue | None | SBIR Phase I up to $323,090 (SBIR.gov, 2026) |
| Crowdfunding | Pre-seed, consumer products | Depends on the type | Up to $5M a year under Regulation Crowdfunding (SEC) |
| Loans and debt | Revenue or collateral | None (venture debt adds warrants) | SBA 7(a) up to $5M; microloans up to $50,000 (SBA) |
| Revenue-based financing | Recurring revenue | None | From $10K MRR at some lenders, Founderpath among them |
The 9 Startup Funding Options
1. Bootstrapping (personal savings and customer revenue)
Bootstrapping means funding the company with your own money and then with what customers pay you. You keep all the equity and answer to no investor, but growth is limited by the cash the business makes. It is the most common start by far: in the Federal Reserve’s 2023 Small Business Credit Survey of startup firms, 28% of employer firms up to two years old put in owners’ money in the prior year, more than any outside source.
It can go a long way. Flipsnack founder Gabriel Ciordas has bootstrapped the company since 2011, never raised equity and still owns 100% of it. He expected to close 2025 at about $15 million in revenue, up from about $12 million in 2024 (per GetLatka). Our guide to bootstrapping a startup covers the stages and when to add outside capital.
2. Friends and family
Friends and family money is often the first outside check, given on trust before there is much to show. In the same Fed survey, 15% of employer startups borrowed from family or friends in the prior year. The money can be a gift, a loan or equity, so write down which one it is: a simple loan agreement or a SAFE with the same terms your later investors get protects the relationship and keeps your cap table clean. Only take what people can afford to lose.
3. Angel investors
Angels are wealthy individuals who invest their own money, usually in exchange for equity or a SAFE, at the pre-seed and seed stages. According to the UNH Center for Venture Research, angels invested $17.9 billion in 55,346 US companies in 2024, and 59% of their deals were seed or start-up stage. Software accounted for 20.2% of deals. The same report puts the yield rate at 22.6%: a founder who pitches angels has a slightly better chance than 1 in 5 of getting funded.
4. Accelerators and incubators
Accelerators trade a small check, a fixed program and a network for equity. Y Combinator’s standard deal is $500,000: $125,000 for 7% of the company plus $375,000 on an uncapped SAFE with a most favored nation clause. Techstars invests $220,000 in its standard program. Incubators are usually earlier and lighter: workspace and mentoring, often through a university or a local economic development agency, with little or no money.
The program can matter more than the check. Zapier went through YC and had raised only about $1 million when CEO Wade Foster spoke with Nathan Latka, yet he still counts YC among its most useful investors:
I think our investors are solid. We went through YC, a big stakeholder for us, one of the larger stakeholders for us. And they continue to just provide a lot of useful value even at the stage that we’re at. So, you know, while I think there’s a lot of bad actors in venture, I do think there are very good folks out there as well that can truly live up to that value-add pitch that you hear so often.
Wade Foster, CEO and co-founder, Zapier
5. Venture capital
Venture capital firms invest other people’s money in startups that could return the whole fund, in exchange for equity and usually a board seat. Each round sells part of the company: Carta’s Q2 2026 benchmarks put the median seed round at $4.5 million, raised at a $23.9 million post-money valuation with 19.4% dilution, and the median Series A at $14.7 million with 18.7% dilution. VC suits companies chasing a large market where speed matters more than ownership. It is a poor fit for a business that could grow profitably on its own, because investors need a very large exit to make their model work. Our guide to venture capital for SaaS compares it with debt, and the dilution calculator shows what a round costs you in ownership.
Raising also sets a pace. SpeedSize raised about $5 million in 2022 and 2023, and its co-founder Vlad Malanin was asked whether he regrets it:
I wouldn’t say that I regret, maybe in a way … I regret … the decisions which were forced with that kind of fundraising. So, you know, we got the regular VC fever, the way how they force you to spend more money and just to chase the growth, which is reasonable. However, it’s very easy to make mistakes, and what we learned the hard way is that VCs are always less active in our case, based on our experience, than they claim to be.
Vlad Malanin, co-founder and CTO, SpeedSize ($6M ARR)
6. Grants
Grants are money you don’t repay and that costs no equity, but they fund research and specific goals rather than general growth, and applications take months. In the US the main federal program is the Small Business Innovation Research (SBIR) program and its sister STTR, run through 11 federal agencies. As of April 2026, agencies can award up to $323,090 in Phase I and up to $2,153,927 in Phase II without a waiver. Congress reauthorized both programs on April 13, 2026, through September 30, 2031, after a six-month lapse. The SBA itself does not provide grants for starting or expanding a business. Outside the US, governments run similar programs, and founders often find out late:
You also can do venture debt, venture financing, or if you are in Europe you can do a lot of subsidies from [the] European Union, right? Nobody told us about it before, right? And we were like, subsidies, that’s only for bad guys. Well, yes and no … If you are bootstrapping, learn how to work with financial instruments. Cash is not the only financial instrument you have.
Pavel Doležal, partner, Keboola
7. Crowdfunding
Crowdfunding raises small amounts from many people online. Rewards crowdfunding (Kickstarter, Indiegogo) pre-sells a product and costs no equity, which suits consumer hardware and games more than software. Equity crowdfunding sells shares or debt to the public under Regulation Crowdfunding, which caps a company at $5 million in 12 months.
The checks are small. The SEC’s 2025 analysis of Regulation Crowdfunding counted 8,492 offerings from May 2016 to the end of 2024. 3,869 of them reported proceeds, about $1.3 billion in total, and the average successful offering raised about $346,000. Only 3.4% of the issuers that raised money later got venture capital.
8. Loans and debt
Debt lets you keep your equity, but lenders want to see how you will repay, so most loans need revenue, collateral or a personal guarantee. SBA 7(a) loans go up to $5 million and SBA microloans up to $50,000, with an average of about $13,000 and terms of up to seven years. Business credit cards fill short gaps at a high rate. See our guide to bank loans for SaaS for how banks underwrite software companies.
Banks warm up as revenue grows. VizyPay, a bootstrapped payments company, later took a $1.5 million community bank loan, released in tranches as needed and personally guaranteed by its CEO, instead of selling equity. Austin Mac Nab on the early years:
We knew the year one and year two, year three, like, there’s no way … a bank would even look at us twice. … But when you’re talking about bigger revenue numbers of 10,000,000, 15,000,000, well, they tend to look at you.
Austin Mac Nab, CEO and founder, VizyPay
Venture debt is a loan for companies that have raised venture capital, usually with warrants attached. It is growing but concentrating: US venture debt reached $62.4 billion in 2025 while the number of deals fell from 1,168 to 943, according to the PitchBook-NVCA Venture Monitor. It rarely reaches a company that hasn’t raised a round. Our guide to venture debt covers how it works.
9. Revenue-based financing
Revenue-based financing gives you capital now against your future recurring revenue, with no equity, warrants or board seats. It suits software and subscription companies that already have predictable revenue and a clear use for the cash, like a hire or a marketing channel that pays back within a year. Some SaaS lenders, Founderpath among them, start at $10K MRR. Our guide to revenue-based financing explains the costs and terms.
Scholarship Owl shows when it fits. The company is 100% bootstrapped, its CEO and partners own all of it, and it made $6 million in revenue in 2023 (per GetLatka). Its marketing is paid today and earned back as subscriptions over the following year, so it used Founderpath capital, $300,000 in its latest round at the time of the interview, to close that gap:
We basically take the money today of what we would make on that student within the next year and buy the traffic now and, you know, make that money throughout the next year.
David Tabachnikov, CEO, Scholarship Owl
Watch the full interview with David Tabachnikov, with transcript.
How to Choose a Startup Funding Option
Start with two questions. First, do you have revenue yet? Lenders and revenue-based financing need it, so before revenue your choices are your own money, friends and family, grants, crowdfunding, angels and accelerators. Second, how much ownership will you give up to grow faster? If the company needs millions before its first sale, as hardware, biotech or a winner-take-all market often does, equity is usually the only way to raise that much. If customers can fund the early product, bootstrap it and add debt or revenue-based financing once revenue recurs.
Most companies combine options over time. Boomerang raised one small round, reached profitability on it and never raised again:
We started back in 2010, three engineers, first-time founders with no money. We were actually at the stage where we were putting our moving expenses on credit card. We came out to California and raised our first 400 [thousand], and then we somehow got to profitability within about 18 months, … mainly because we were very lean. … That 400K gave us three founders, one employee, one contractor[s], and it lasted about 18 months, and we never raise[d] again. We have grown to 8 million in ARR with our own revenue, being profitable every single year since about 2012.
Aye Moah, co-founder and CEO, Boomerang
Early-Stage Funding Rounds: Pre-Seed, Seed and Series A
Early-stage startup funding covers the rounds from the first outside money to the first institutional venture round. Carta’s data on US startups shows the typical size of each:
| Round | What it funds | Typical size | Median dilution |
|---|---|---|---|
| Pre-seed | A prototype and first customers | Average SAFE or note: $276,000 (Q2 2026) | Not published |
| Seed | Product-market fit | Median round: $4.5M at a $23.9M post-money valuation | 19.4% |
| Series A | Scaling a proven model | Median round: $14.7M | 18.7% |
Pre-seed money usually comes as several SAFEs or convertible notes rather than one priced round: Carta’s State of Pre-Seed for Q2 2026 puts the average instrument at $276,000. The gap between rounds is long, too: the median time from seed to Series A reached 616 days, a little more than 20 months, in Carta’s Q2 2025 data. Some seed rounds go a long way: Canva raised $3 million in 2013 and is now valued at $42 billion. For what makes a company early stage, see what is an early stage startup.
Startup Funding Options FAQ
What type of funding is best for a startup?
The one that matches your stage and how much ownership you want to keep. Most founders start with their own money and customer revenue. Companies that need millions before their first sale usually need angels or venture capital. Companies with recurring revenue can use loans or revenue-based financing and keep all their equity.
How do I get initial funding for a startup?
Most first money comes from the founders themselves, then from friends and family, angels or an accelerator. In the Federal Reserve’s 2023 Small Business Credit Survey, 28% of startups with employees used owners’ money in the prior year and 15% borrowed from family or friends, while only 3% received any equity investment.
What is early-stage startup funding?
It is the capital a company raises from its first outside money through its Series A: pre-seed, seed and Series A rounds, plus non-equity sources such as grants, loans and revenue-based financing. Carta’s Q2 2026 medians put a seed round at $4.5 million and a Series A at $14.7 million.
Can you fund a startup without giving up equity?
Yes. Bootstrapping, grants, rewards crowdfunding, loans and revenue-based financing all leave your ownership intact. Grants and crowdfunding work before revenue; loans and revenue-based financing need revenue, and some SaaS lenders start at $10K MRR.
How much equity do you give up in a seed round?
About a fifth. Carta’s Q2 2026 benchmarks put median seed dilution at 19.4% and median Series A dilution at 18.7%, so raising both rounds at those medians sells about 34% of the company in total (our arithmetic on Carta’s figures).
Is it true that 90% of startups fail?
Not for businesses in general. US Bureau of Labor Statistics data to March 2025 shows that 77.9% of new businesses survive their first year, 51.4% survive five years and 34.7% survive ten. Startup Genome’s 2019 report, which looked at tech startups, estimated that only 1 in 12 succeed.
What is the $10,000 startup grant?
There isn’t a single $10,000 startup grant. The SBA states that it does not provide grants for starting or expanding a business, and federal grants such as SBIR fund research and development. Private grants exist, but they are small and competitive, so plan around other sources.
How long does it take to go from seed to Series A?
The median time from seed to Series A was 616 days, a little more than 20 months, in Carta’s Q2 2025 data. Plan your seed round to last at least that long.
Fund Growth Without Giving Up Equity
Once customers are paying every month, you no longer have to choose between slow growth and dilution.
Founderpath provides non-dilutive capital for B2B SaaS companies with at least $10K MRR. There’s no equity, no warrants, no board seats and no personal guarantees. Connect your billing, banking and accounting data, and most founders see funds within 24-48 hours.
Check what you qualify for. It takes less than 5 minutes.
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