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12 Creative Ways to Fund Your Startup

Your Guide to (Creative and Non-Traditional Ways) to Finance Your Startup.

Creative Ways to Raise Money for Your Startup

So you are an entrepreneur.

First -- congrats on making the leap.

Second --- you may have heard of Paul Graham's Startup Curve.

If you are reading this, you are likely past the point of initial exuberance and rapidly descending into the trough of sorrow, as you are contemplating,

“How Am I Going to Fund This”

Despair no more!

This article is your guide on navigating the tough funding waters (or hopefully at least will serve as a point of inspiration for out-of-the box fundraising.)

A Quick Airbnb Story

Let me start with a quick story…

Many of you might be familiar with Brian Chesky and Joe Gebbla, the founders of Airbnb.

Well, something you might not know - after a year in the trough of sorrow the pair was collectively $40,000 in credit card debt

To keep the business alive, they sold more than $30,000 worth of themed cereal.

That is right, themed cereal.

“Obama O's, the Cereal of Change,” and “Cap’n McCain's, a Maverick in Every Box.”

Chesky and Gebbla were both designers from the Rhode Island School of Design. They designed the box artwork themselves and managed to cheaply print the images on each box.

Maybe, you just need to go in a little credit card debt (say 40k or so) to get those creativity juices flowing.

***Just for the record, this is not legal advice***

But, if you want to read more about their story you can here.

Personal Credit

I know boring . . .

But friends, family, and personal savings and credit should be your first source of finance for your startup.

Why? Not for the reason above

The real reason…

If you are not willing to buy in – Why should anyone else?

To start The Founder’s Attorney I got a bit creative and took out a Bar Study loan. There are several private companies that provide loans that subsidize law students while studying for the bar.

I also used my own personal, and business credit cards.

Be wary though, as everyone knows, credit cards and personal loans come at a high interest rate (>20%). This is not a solution forever, but can potentially work for a short period.

You can also take out a loan on your home.

Creative Financing - Home Loan

I didn’t have that option since I live in Southern California and I am a Millennial.

Meaning I will be renting for the rest of my life...

Borrow Against Life Insurance

This one also didn’t really apply to me...

But if you insured your life with a whole life policy more than 3 years ago this may be a creative source of cash.

What does this mean?

If you have owned a whole life insurance policy for more than 3 years - it has a cash value.

Read the fine print of you life insurance policy and you may be able to borrow against it.

Contact your insurance professional for details on how borrowing against life insurance works.

What is the Difference Between an Incubator and an Accelerator?

The line between incubators, accelerators, and early stage VC’s is getting cloudier by the day, but the gist is

Incubator = sprouts of an idea

Accelerator = green house

Incubator Programs

Think of an incubator as a lab in which you are matching the right seed with the right soil and hoping it sprouts.

There are many different types of incubators, some of which are specialize in a particular industry. Incubators will vary in what they will provide.

But, some general features are:

  • Office space

  • Industry mentors

  • Marketing

  • Networking

  • Funding

Be careful though, it is easy for lower quality incubators and accelerators to promise a lot and not deliver much more than capital or a place to work out of.

But, if you can get the right perspective of seasoned industry professionals during the most crucial time of your business's development it can make all the difference.

Incubators are found in almost every major city, but since I am based out of Santa Monica, here are some ideas if you are a business in the Southern California ecosystem

Los Angeles Incubators:

MuckerLab – Santa Monica

Idealab – Pasadena

Science Inc. - Santa Monica

Amplify.LA - Venice

Accelerator Programs

Accelerator programs tend to be less varied.

Think of the accelerator as a greenhouse where your idea is the seedling and the goal is for the plant to grow as hardy as possible in a 3-month window so that it can survive outside of the greenhouse.

Green House - Creative Startup Fundraising

In exchange for a small stake in your company, typically 6% +/- 1 or 2% accelerators will provide a place for your team to work together, some specific industry guidance and mentorship, and a small cash runway.

The most famous accelerators are Techstars and Y Combinator.

You should apply if your are out of the 'sprouting an idea phase.'

Meaning you should have some traction and a team.

These program are usually short and intense and another common feature is a demo day, where startups pitch for investment.

Early Stage VC’s and Angels

Angel Investors

Angel investors—private investors, informal venture capitalists—might be another good source of capital.

These are wealthy individuals, usually accredited investors, who personally finance the same new, unproven ideas and businesses as venture capitalists.

Angel investors usually invest just before entrepreneurs would qualify for VC funds, so you have a better shot of one willing to look at your idea.

An angel invests her own funds, as compared to venture capitalists who invest the funds of others.

An angel investor can be anyone from your Uncle Joe who has some extra cash he wants to put to work, to sophisticated angel networks

The goal is to get an investor who has strategic experience, so they can provide tactical benefit to the company they are investing in.

Venture Capitalists

Depending on what stage your business, you can also look to early stage venture capital.

These are companies that focus on providing strategic introductions, advice, and capital to help early stage companies grow.

Be wary though – by taking VC dollars you are committing to be a fast-growth company with an exit strategy in the next 5-10 years.

Online Lending

Now we get into some of the fun ones...

You can go into your local bank and look at getting approved for an SBA loan.

It is not a bad option at all.

You can read more about it here.

But, there is likely to be miles of red tape.

You may get turned down, and even if approved you are not going to get the money instantly.

Recently, a new option has sprung up

Online lenders are a popular alternative to traditional business loans.

These platforms have the advantage of speed.

An application takes only about an hour to complete, and the decision and accompanying funds can be issued within days.

Here are the links to a couple you can give a shot.

Note, depending on your credit history it may be more or less difficult to get a loan.

Your credit will also affect the interest rate at which you can get a loan.


You may be familiar with the concept of microloans if you are looking for a really small amount or are in the nonprofit sector

Grameen America is affiliated with the Grameen Foundation. The Grameen Foundation is an international organization known for programs that help poor communities address their own needs.

There are many private companies and non-profits that offer small loans to individuals who would not normally quality for bank financing.

Here is an article in Nerd Wallet discussing the top 13 microlenders in the USA.

Small Business Grant

Everyone loves some free money. Well if your fall in a select group or if it is in the public sector it might qualify for an SBA or a government grant.

Direct from the Small Business Associations website -

"Use our Loans and Grants Search Tool to get a list of financing programs for which you may qualify.

Note: Most small businesses do not qualify for government grants."

Hey, it is worth a shot right?

Customer Advances

Why not charge up front for the service?

If you are a service provider you can ask customers to front the money.

This way, the business can grow without waiting for customers to pay for outstanding invoices.

But, be very careful with this strategy, and make sure that you can actually come through with the service.

What is Crowd Source Funding?

There are three different types of crowd source funding.

1.) Rewards Based Funding - - Kickstarter and IndieGoGo

The first and the one you have undoubtedly heard of is Rewards Based Funding.

Think Kickstarter or similar crowdfunding sites.

Crowdfunding sites allow the Crowd, or any person in the world, to invest a small amount of money in exchange for a product or service.

As of the date of this article almost $3 billion has been pledged on Kickstarter alone.

2.) Equity Crowd Source Funding

But, since May 16, 2016, when the SEC released the much-anticipated rules on equity crowd funding, the Crowd can now invest in equities.

The change was made by the Jumpstart Our Businesses (JOBs) Act and required the SEC promulgate the rules.

WeFunder is one of the major names in the equity crowdfunding space that is marketing solely to the Crowd and not operating under a Regulation D (accredited investor) exemption.

3.) Personal Fundraising . . . With Facebook?

Personal crowdfunding campaigns have been popularized by sites like GoFundMe.

As you know social networks drive an enormous percentage of crowdfunding contributions.

Few people are browsing Kickstarter or Indiegogo to for their rewards. Even less are going to WeFunder to own part of your business.

If you want to run a successful campaign you are going to have to rely on your own promotion to and (hopefully) re-sharing on Facebook to raise dollars.

Well, Facebook has made it a bit easier to raise money by streamlining the crowdfunding process.

Cue Facebook’s introduction of Personal Fundraiser to help users back causes such as:

  • Education: such as tuition, books or classroom supplies

  • Medical: such as medical procedures, treatments or injuries

  • Pet Medical: such as veterinary procedures, treatments or injuries

  • Crisis Relief: such as public crises or natural disasters

  • Personal Emergency: such as a house fire, theft or car accident

  • Funeral and Loss: such as burial expenses or living costs after losing a loved one

Facebook says its goal with crowdfunding is “not to make a profit,” but rather to “create a platform for good.”

And it is cheaper than GoFundMe by 1%.

The new tool, (not yet) available for businesses, allows users 18 or older to

"raise money for themselves, a friend or someone or something not on Facebook."

The Best of the Rest

There are lots of other options for creative fundraising. Think outside the box for something that compliments your skill set.

You don’t have to come ups with something as creative as “Obama O's” to make money for your startup.

You could try tutoring, driving for Lyft/Uber, selling/leasing/renting/raffeling some stuff.

Email me with other (legal) ideas.

If I get enough I will do a follow-up post!


This article was written by Curtis Roberts, an attorney at The Founder's Attorney.

If you have any questions or suggestions he can be reached at


This article is for general information and entertainment purposes only. The views of the author are their own and do not represent the views of The Founder's Attorney. The information presented should not be construed to be formal legal or financial advice nor the formation of a lawyer/client relationship or any fiduciary duty.

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