Why this matters
Bootstrapping, loans, angels, VC, and crowdfunding aren't interchangeable pots of money — they're different games with different rules and referees. Pitching the wrong source wastes months.
What "done" looks like
- You can explain each major option in one sentence
- You know typical check sizes and what each source demands in return
- You've matched your business model to the one or two realistic options
- You know which option you'll pursue first, and why
How to do it
- Start with bootstrapping as the default. Customer revenue is the only money with no strings.
- Price out debt. SBA 7(a) loans run up to $5 million; you keep all equity but repay on schedule, usually with a personal guarantee.
- Understand angels: individuals writing roughly $10K–$100K checks, usually on SAFEs or notes.
- Understand VC: institutional money that needs very large outcomes and assumes multiple future rounds.
- Look at crowdfunding: rewards-based (Kickstarter) pre-sells a product; equity crowdfunding (Reg CF) sells small stakes to many backers.
- Match to your model: steady cash flow suits debt; a huge market plus a need for speed suits equity.
Common mistakes
- Pitching VCs with a healthy lifestyle business — wrong audience, not wrong business
- Avoiding debt because equity "feels safer"; if you succeed, equity was the most expensive money available
- Launching rewards crowdfunding without pricing fulfillment costs
Real-world examples
- The SBA 7(a) program is the most common US government-backed small-business loan, capped at $5 million.
- Oculus raised $2.4M on Kickstarter in 2012 against a $250K goal.
- Y Combinator's standard deal is $500K: $125K for 7% plus $375K on an uncapped MFN SAFE.
From a founder's point of view
Choosing a funding source is choosing a partner whose incentives shape every decision after the wire hits. A lender wants you steady, a VC wants you enormous, and a Kickstarter backer wants the thing shipped. Pick the pressure you can live with.
Rule of thumb
If you can't name what a funding source demands in return, you don't understand that option yet.