You’ve done the hard part—turned an idea into an online business, validated it, and maybe even attracted your first customers. The sparks are there, and now you’re ready to pour fuel on the fire. To scale, you need more than grit and late nights—you need funding. The kind of funding that helps you hire the right team, expand faster, and take your business beyond the early wins.
But here’s the big question: where does that money come from?
That’s exactly what this guide is about. We’ll break down the different funding sources available to you, explain when each makes sense, and show you real examples of businesses that started with these same options.
Let’s dive in.
Leverage
Leverage is when you don’t raise external funding at all. Instead, you use strategies in your marketplace that allow you to buy time, generate early cash flow, and cover expenses as you go. It’s about using existing resources, negotiation, and timing to get started without upfront capital.
When to use leverage
Leverage works best when you’re just starting out, you have limited access to funding, or the capital required to launch seems out of reach. It allows you to get moving without waiting for an investor, bank, or grant.
Leverage Example
Richard Branson famously used leverage when starting Virgin Atlantic. He didn’t buy a plane outright—instead, he negotiated with Boeing to lease one of their idle aircraft. Because airline tickets are often sold in advance, the cash flow from early sales gave him enough runway to cover fuel, fees, and lease payments later. This strategy bought him time to launch, earn, and repay without needing upfront funding.
Savings
Self-funding—also known as bootstrapping—often begins with your personal savings. It’s the most straightforward way to finance your online business because you rely on your own capital instead of external investors. Start by estimating how much you’ll need to launch, then create a plan to hit that savings goal. This might mean continuing in your current job a little longer, cutting expenses, or taking on freelance gigs until you’ve set aside enough to kick things off.
When to use Personal savings is a strong option when you’re just starting out. It gives you complete control, avoids early dilution of ownership, and helps you prove traction before bringing in outside investors. By funding the first stage yourself, you show confidence in your idea—something that makes future backers more willing to invest.
Example Sara Blakely launched Spanx, her shapewear company, with $5,000 from her personal savings. She used that initial capital to create prototypes and market her idea. Today, Spanx is valued at over a billion dollars, proving that even small savings can spark massive success.
Family
Family support is often one of the earliest funding sources for entrepreneurs. Unlike banks or investors, family members already know and trust you, which makes it easier to secure their backing. They are usually investing in you as a person first, not just your business idea. In many cases, they may also be more patient and understanding if the business takes longer than expected to succeed.
When to use Family funding works best in the early stages, when you have a basic online business idea and need a modest amount—often under $10,000—to build your first prototype or test the market. If you happen to come from a well-off family, you might be able to raise significantly more, but it’s wise to start small and clear about expectations.
Example Markus Villig, founder of Bolt (formerly Taxify), raised €5,000 from his family to build the company’s first prototype and recruit drivers in Estonia. That small initial boost set the stage for Bolt to grow into one of Europe’s leading mobility platforms.
Friends
Friends can be another valuable source of early funding. Like family, they already know and trust you, which makes them more likely to back your idea if it sounds promising. Often, the decision to support comes down to their belief in you as much as in the business itself.
When to use Funding from friends is most common in the early stages when you need modest capital to get started. The amount you can raise depends on the financial situation of your circle—some friends may contribute small amounts, while wealthier ones might provide significant backing. In some cases, friends who invest early may even join as co-founders, taking a more active role in building the startup. At later stages, friends who are high-net-worth individuals can also act as angel investors.
Example Apple Inc. was co-founded by Steve Jobs and Steve Wozniak, who initially funded the company through personal networks. Wozniak sold his scientific calculator, while Jobs sold his Volkswagen bus to raise their first capital. That small pool of money helped them build the first Apple computer—launching what would eventually become a trillion-dollar company.
Angel investors
An angel investor is a high-net-worth individual who provides capital to early-stage startups in exchange for equity or convertible debt. Beyond money, many angels also bring valuable expertise, industry connections, and mentorship. They are often found through platforms like AngelList, local angel networks, or personal introductions.
When to raise from angel investors Angel investors are most useful in the earliest formal funding stages—typically pre-seed and seed. At this point, your business likely has a prototype, some early traction, and a clear vision, but needs capital to grow quickly. Angels help bridge the gap before larger venture capital firms become interested.
Example Airbnb, now a global marketplace for short-term rentals, secured its first meaningful backing from angel investors. Early supporters included notable angels like Elad Gil and Paul Graham (through Y Combinator). Their early belief in Airbnb gave the founders the resources and guidance needed to scale beyond selling cereal boxes to stay afloat.
Crowdfunding
Crowdfunding is the process of raising funds from a large number of individuals who each contribute small amounts, usually through online platforms like Kickstarter, Indiegogo, or GoFundMe. It allows entrepreneurs to validate demand, build a community, and generate capital without giving up equity—depending on the type of crowdfunding chosen (reward-based, donation-based, or equity crowdfunding).
When to use Crowdfunding is especially effective at the idea or prototype stage, when you need to prove that people are interested in your product or service. It works best for consumer-facing businesses with a clear, exciting product that can be showcased through engaging storytelling, visuals, or demos.
Example Peloton, the at-home fitness company, launched a Kickstarter campaign in 2013 and raised over $300,000 for its connected stationary bike. That initial boost helped validate the product and attract further investment. Today, Peloton is worth billions of dollars, proving the power of crowdfunding to kickstart major success stories.
Accelerators
Accelerators are organizations that support early-stage startups through intensive programs that typically last 3–6 months. They provide mentorship, education, networking opportunities, and often a small amount of seed funding in exchange for equity. The goal, as the name suggests, is to accelerate a startup’s growth by giving founders access to experienced mentors, investors, and structured support. Well-known accelerators include Y Combinator, Techstars, and 500 Global.
When to use Accelerators are ideal at the idea or very early stage, especially when you need guidance, validation, and exposure to investors. Each program has its own requirements, so startups usually need at least a prototype, clear vision, and a committed founding team to be accepted.
Example Stripe, the global financial services and payment processing company, participated in Y Combinator’s program in 2010. The mentorship, network, and credibility Stripe gained through YC helped it scale rapidly. Today, Stripe is valued in the tens of billions of dollars, making it one of the most successful accelerator alumni.
Incubators
Incubators are organizations that support startups by providing mentorship, education, networking opportunities, office space, and access to essential tools and resources. Unlike accelerators, incubators usually do not take equity or make significant financial investments in the startups they support. Their focus is on nurturing early-stage companies over a longer period of time, often until the startup is ready to attract outside funding or join an accelerator.
When to use Incubators are best suited for startups in the early stages that need resources, guidance, and a supportive environment but cannot yet afford these on their own. They are especially helpful if you are refining your idea, building your prototype, or testing your business model.
Example Instagram, one of the world’s most iconic social media platforms, was initially developed at Dogpatch Labs, an incubator. The support and environment provided there helped the founders refine the product before it was eventually acquired by Facebook for $1 billion.
Venture capital
Venture capital (VC) is funding provided by professional investors, venture capital firms, or investment banks to help startups scale and achieve long-term growth. Unlike angel investors, VCs manage large pools of money and usually invest in exchange for equity and a significant role in guiding the company’s strategy. Venture capital is highly competitive to secure but can provide the financial fuel and connections needed to grow rapidly.
When to use Venture capital is most common at the seed stage and beyond, when a startup has already proven product–market fit, gained traction, and demonstrated growth potential. While some firms participate in early rounds, VCs typically prefer companies with strong teams, scalable business models, and the ability to generate large returns.
Example Facebook received one of its earliest major investments from Accel Partners in 2005, during its Series A round. That $12.7 million injection of capital helped Facebook expand beyond college campuses and laid the foundation for its explosive global growth.
Grants
Grants are funds provided to startups by organizations, governments, or foundations without requiring repayment or equity. Unlike loans or investments, grants are essentially free money awarded to help businesses that meet specific criteria. They are often distributed through competitions, research programs, or structured applications. In addition to cash, some grants also come in the form of credits for online tools and services—such as cloud hosting, advertising, or software platforms—that can significantly reduce startup costs.
When to use
Grants are most relevant in the early stages of a startup, especially if your business aligns with specific themes such as health, education, social impact, or innovation. If your startup meets the eligibility criteria, applying for grants can give you valuable funding without giving up ownership. Platforms like Hatch Pitch and government innovation funds are great places to start looking.
Example
CureMetrix, a health tech startup developing artificial intelligence software to improve mammography screenings, received funding from the National Institutes of Health (NIH). That support helped the company advance its research and scale its solutions in the healthcare sector.
We’ve explored a wide range of funding options—from leveraging personal savings and support from friends or family, to securing angel investors, venture capital, and even grants.
Each path has its own strengths and best timing, but no matter which option you pursue, success depends on how ready you are when you ask for support.
In this article, we’ll cover what you need to prepare before reaching out—whether it’s a clear business plan, a compelling pitch deck, early traction, or solid financial projections. Laying this groundwork not only boosts your chances of securing funding but also sets your startup on a path for sustainable growth