So you have a great business idea, and you are ready to build it. But there is one small problem. You need money to get started, and the thought of pitching to venture capitalists or taking out a massive bank loan feels overwhelming—or just plain wrong for where you are right now.
If this sounds familiar, you are in good company. Many successful businesses started with founders who had empty pockets but full hearts. They used their own savings, got creative with their spending, and looked for money in places that didn’t require them to give away big chunks of their company.
This article walks you through the top funding options for bootstrapped startups. We will look at practical ways to get the cash you need while keeping control of your business. Whether you need a few thousand dollars to build a prototype or a larger sum to handle growing demand, there is something here for you.
What Does Bootstrapping Really Mean?
Before we dive into where to find money, let us get clear on what bootstrapping means. When you bootstrap a business, you rely on your own money and the money your business earns to grow. You do not take money from outside investors who want a piece of your company in return.
Think of it like building a house with your own two hands instead of hiring a general contractor. It takes longer, and you do most of the heavy lifting yourself. But when the house is finished, it is completely yours.
Bootstrapping forces you to be smart with every dollar. You learn to tell the difference between what you really need and what would just be nice to have. This discipline often leads to healthier businesses in the long run.
But bootstrapping does not mean you can never take outside money. It just means you are careful about what kind of money you take and what you give up in return. Let us look at your options.
Option 1: Your Own Savings and Revenue
This is the purest form of bootstrapping. You use the money you have saved from your day job. You put it into your business. Then, as customers start paying you, you put that money right back into growing further.
Why this works well:
You have complete freedom. There is no one to answer to but yourself. You can change direction anytime without asking for permission. And you keep 100 percent of what the business becomes.
The hard part:
It can be slow. Really slow. And there is real risk because it is your personal money on the line. If things go wrong, you lose more than just a business.
Real talk:
Many of the biggest names in business started this way. Think about Facebook in its early dorm-room days or GoPro, which Nick Woodman founded by selling shell necklaces. They did not start with millions. They started with whatever they had.
If you have a job right now, consider keeping it while you build. Use your paycheck to fund the business on the side. Set a goal—maybe five thousand dollars in monthly recurring revenue—as your signal to go full-time.
Option 2: Friends and Family
Your inner circle knows you. They know your work ethic. They want to see you succeed. This makes them a possible source of early money.
The upside:
These loans often come with no interest or very flexible terms. The people lending you money believe in you as a person, not just your business plan. And the process is usually fast and informal.
The downside:
Money and relationships can be a dangerous mix. If the business struggles, you might face awkward Thanksgivings for years to come.
How to do it right:
Put everything in writing. Even if it is your mom. Write down how much you are borrowing, when you plan to pay it back, and what happens if you cannot. Clear terms protect your relationships .
Option 3: Small Business Grants
Grants are free money. No repayment. No giving up ownership. You just have to qualify and win the award.
Who gives out grants?
The government is a big player here. In the United States, programs like the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) give out billions of dollars to startups working on innovative projects.
There are also private foundations, corporate programs like Google for Startups, and industry-specific competitions .
What to watch for:
Grants are competitive. The application process can take weeks or months. And the money often comes with rules about how you can spend it.
Who should try this:
If your business has a research angle, a social mission, or a focus on helping underserved communities, grants could be your best friend. Life science and clean energy startups have particularly good odds in this space .
Option 4: Crowdfunding
Crowdfunding means raising small amounts of money from lots of people. You tell your story online, and anyone who likes what you are building can chip in.
Two main types:
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Reward-based crowdfunding (Kickstarter, Indiegogo): People give you money, and you promise them a future product or a special experience. This works great for physical products that people can get excited about.
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Equity crowdfunding (StartEngine, Wefunder): People give you money, and you give them a small piece of your company. This is newer but growing fast.t
Why is itmart:
Crowdfunding does more than raise money. It proves there is demand for your product. If strangers are willing to pay for something that does not exist yet, you have real validation.
The catch:
Running a crowdfunding campaign is a full-time job. You need a great video, strong branding, and a plan to drive traffic to your page. If you launch quietly, nobody will find you.
Option 5: Revenue-Based Financing
This one is getting popular, and for good reason. Revenue-based financing gives you upfront capital in exchange for a percentage of your future sales.
How it works:
Let us say you get $50,000. You agree to pay back $65,000 over time, but you do it by giving the lender 5 percent of your monthly revenue. When you have a great month, you pay more. When sales are slow, you pay less.
Who is this for?
If your business already has steady sales, this can be perfect. It is especially popular with software companies (SaaS) and e-commerce brands.
The big advantage:
You keep all your equity. No dilution. No board seats. And because payments flex with your revenue, you do not get crushed during slow periods.
Companies like CapChase (for SaaS) and ClearCo (for e-commerce) specialize in this type of lending.
Option 6: Convertible Notes and SAFEs
These are fancy names for a simple idea. An investor gives you money now. Later, when you raise a bigger round of funding, that money turns into shares in your company.
Why founders like this:
When you are just starting, it is hard to say what your company is worth. A convertible note lets you delay that conversation. You get the money now, and you figure out the valuation later when you have more proof.
The Y Combinator SAFE:
The SAFE (Simple Agreement for Future Equity) was created by famous startup accelerator Y Combinator. It is a simple, standardized document that makes this process easier and cheaper.
Who uses this:
Friends, family, and early angel investors often prefer this structure because it gives them a clear path to owning a piece of your company down the road.
Option 7: Strategic Partnerships
Sometimes, the money you need does not have to come from a bank or an investor. It can come from another business that wants what you have.
What this looks like:
Maybe a bigger company in your industry pays you to build a tool they need. Or they become your first big customer and pay upfront for a multi-year deal. Or they give you resources—office space, software, expertise—in exchange for working together.
The benefit:
These deals often come with more than just money. They bring credibility, customers, and connections.
A Quick Word About Loans and Credit
We have not talked much about traditional loans yet. That is because for very early startups, bank loans are hard to get. Banks like to lend to businesses with a track record and collateral.
But there are alternatives:
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Microloans: These are small loans, often under $50,000, from nonprofit lenders or community development financial institutions (CDFIs). They are designed for exactly the kind of business you are building.
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Invoice financing: If you have already done work for clients but they have not paid you yet, you can borrow against those unpaid invoices. Companies like BlueVine and Fundbox offer this.
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Business credit cards: For small, everyday expenses, a credit card can bridge the gap. Just be careful with interest rates.
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Peer-to-peer lending: Platforms like Prosper connect you directly with individual lenders who fund your loan.
Which Option Is Right for You?
The best choice depends on where you are right now.
If you have no revenue yet and need proof that your idea works, start with your own savings or a crowdfunding campaign. Grants are also worth the effort if you qualify.
If you have some revenue and need to grow faster, look at revenue-based financing or microloans. These let you keep control while giving you fuel for growth.
If you have big ambitions and need serious money, convertible notes from angel investors or strategic partnerships might be your path.
And remember, you do not have to pick just one. Many successful startups mix and match. They use savings to build the first version, crowdfunding to prove demand, and revenue-based financing to scale.
What Investors Look For (Even If You Are Not Taking Their Money Yet)
Even if you plan to bootstrap forever, it helps to understand what makes a business fundable. Why? Because these same things make a business successful.
Investors want to see :
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Traction:Â Are people using your product? Are they paying for it?
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A clear market:Â Do you know who your customers are? How many are there?
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The right team:Â Do you have the skills to make this work?
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A defensible idea:Â What makes you different from everyone else?
When you focus on these things, you build a stronger business. And if you ever do decide to take outside money, you will be ready.
Common Mistakes to Avoid
Let us end with some hard-won wisdom from founders who have been where you are.
Do not take the wrong money. If an investor wants terms that feel unfair, walk away. There are other options.
Do not skip the paperwork. Even with friends and family, write it down. Even with a small grant, read the rules. Surprises are never good.
Do not grow faster than you can handle. Bootstrapped businesses succeed by growing at a sustainable pace. Chasing explosive growth without the cash to support it breaks things.
Do not forget to plan. Map out your cash flow for the next year. Know when money will be tight. Know where it will come from. A little planning prevents a lot of panic.
You Have More Options Than You Think
When you are just starting, it is easy to feel like the only way forward is to find a rich investor who believes in your dream. But that is just one path, and for many businesses, it is not the best path.
The truth is, there are more funding options for bootstrapped startups today than ever before. Grants, crowdfunding, revenue-based financing, microloans, strategic partnerships—each one offers a way to grow without giving up what makes your business yours.
Start with what you have. Add revenue from early customers. Then layer in the right kind of outside money at the right time. That is how you build something that lasts.
Now go make it happen.