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7 Ways to Raise Money for Your Business Without Losing Equity

One of the inevitabilities of running a business is fundraising.  Raising capital is not only a crucial to keeping the doors open and the lights on, as the founder, it is one of your primary responsibilities.  When raising money for your business, most founders have to make the tough decision of how much of their company they want to give up.  But what if you want to raise funds without losing equity?

Most entrepreneurs are reluctant to give up stake in their new or existing business.  And with good reason.  Bringing on investors comes with a number of challenges.  You no longer have full control of your company, you share a smaller portion of the returns, and you are under pressure to bring in big returns to your investors.  Even though there are a lot of good reasons to bring in angel or venture capital, for many it is not the best option.   

The good news is that there are a lot of ways to raise funds for your business without giving up equity.

How to Raise Money for Your Business Without Losing Equity


Crowdfunding is an option that allows you to raise small amounts of money from a larger pool of people.  In 2017, over $16 billion was raised during crowdfunding campaigns.  The average successful crowdfunding campaign is around $7,000 with the campaigns lasting an average of around 9 weeks.

Crowdfunder is the largest network of investors which makes it the most popular choice.  However, in order to get money for your business, you must share equity.  The good news is that there are several other crowdsourcing platforms out there where you can run a crowdfunding campaign.

So here are some other crowdfunding options available where you can raise funds without losing equity.

Kickstarter is for creative projects and donation-based funding. If your project is a cool watch or music or film based, this is the right site to consider. The other categories include art, comics, crafts, dance, design, fashion, film & video, food, games, journalism, music, photography, publishing, technology, and theater. You must raise all the funds you need, or get nothing.


Not just a funding platform Indiegogo also offers a marketplace and support for innovative products.  You can choose either all-or-nothing and flexible funding.


This platform is for creative entrepreneurs who need to fund their creative projects. This works via a subscription model where patrons pay you to consume your creative content.


With thousands of investors and funding sources, Fundable is a good place to raise capital.  The good thing about this platform you have the option of offering equity or rewards to your investors.  That way, you can keep equity and still raise money from the public.


Friends and Family Loan

Not comfortable taking money from complete strangers?  Well, the second funding option may be for you.  Asking friends and family for a business loan is an age old option for raising funds for your business.  Getting a loan from friends and family is not the same things as offering shares of your company in exchange for funds which would involve issuing shares to them.

Taking money from the friends and family can also be risky.  Entrepreneurs who borrow money in order to start their business run the risk of damaging their relationships with their friends and relatives.

To avoid some of the issues that may popup, it is best to keep the loans small.  The amount you borrow should be an amount that you would be able to pay back over a reasonable amount of time in the event your business fails.  That amount is different for everyone but I would suggest you think used car loan as opposed to a mortgage loan.

Another way to gauge if asking friends and family for money is a good idea is to administer the Thanksgiving dinner test.  Legendary Silicon Valley entrepreneur Steve Blank says that if you cannot sit peacefully at Thanksgiving dinner with a friend and family member after you’ve lost all of their money, you probably should not take a dime from them.



Personal Funds


Disposable Income

When using the personal funds for your business, the first place you should look is in your checking account and pockets.  Disposable income is the money you have left after all of your bills are paid each month.  The key is to structure your finances so that you have disposable income for your business.

USA Today reports that during second quarter of 2017, personal disposable income increased an average of 2.8% a year while consumer outlays rose about 4% a year.  That means that too many people are our spending their paychecks.  Instead of relying on their income to support their lifestyles, many people are using savings and utilizing credit.

Don’t be one of those people!  Scale back your lifestyle in order to create a steady stream of money going into a savings account.  Or, you can use that extra money each month to build your business.  In this gig economy, it is possible to do a lot with very little money.


Personal Savings

The next place you should look for funding for your business is in your savings account.  Here’s the thing, typically, savings accounts should hold more money than checking accounts so there you should have more money to invest in your business.  However, just because you have money in your savings account doesn’t mean you should tap into it for your business without due diligence.

A savings account’s primary purpose to keep money safe for a particular purpose.  Whether it’s a home purchase, emergency, or vacation, your savings account should be a place to park money for an important event.  This is why you should consider using your savings account to invest in your business.  

But, you want to think long and hard before using your life savings or emergency fund to put into your business.  You should only use personal savings if you have money you can enough to spare.  

Same goes for using retirement savings, cash saved from insurance policies, and home equity.  You may get penalized for withdrawing funds from an IRA or 401k. There may also be taxes due when you pull from those funds so be familiar with the consequences before making the decision to touch your retirement savings.


Part-time Job/projects/gigs

If you intend on running a leaner startup that doesn’t require a large amount of capital to start and run during the early stages, you can always get a part-time job to help fund the business.  Getting a part-time job can bring in an extra $200-$1,000 a month or more if you select the right job.

The trick is to find a job that is not too labor intensive and does not suck up all of the time you should be using to build your business.  

Driver– Lyft and Uber are the first places to go when looking for some extra cash as a driver.  The average nationwide salary for Lyft and Uber is $16/hr.

Waiting tables-Hourly wages range from $2-$5 an hour but can with tips can bring in much more than you can apply to your business.

Seasonal retails-Working a season retail job can bring in $7-$12 an hour.

Fiverr Gigs-Using your talents and skills to earn gigs on Fiverr can bring enough to fund your business idea.


Startup Competitions

Another good way to get the cash you need for your business is to win a startup competition.  Business is competitive and so are these competitions.  Startup competitions (also known as business plan competitions and pitch competitions) are events where entrepreneurs pitch their startup ideas to an audience in an attempt to win cash for their business.

Some of these competitions can be specific to a certain sector or even a demographic.  For example, there are numerous competitions for just college students. Even if you are not a student, there are several opportunities worldwide for you to enter and compete for funds.


Here are just a few startup competitions out there and their cash prizes:


1. Startupfest $200k Investment Prize: $200,000 of seed money.

2. Global Startup Weekend-Prize: $20000

3. New York StartUP Business Plan Competition-Prize: $15,000

4. Institute for Entrepreneurial Leadership Annual Business Plan Competition-

Prize: Free IFEL Accelerator membership for 1 year and numerous cash prizes worth thousands of dollars.

5.Green Idea Factory Annual Competition-Prize: $7000

6. Hatch Pitch-Prize: N/A

7. The Startup Conference-Prize: $120,000

8. Fast Pitch-Prize: $1000 to $3000

9. Tufts $100k Social and Classic New VenturePrize: $100k

10. Arch Grants Startup Competition-Prize: $50k

11. Launchpad-Prize $40,000


Banks and Finance Company Loans

If the money from a part-time job is still not enough to fund your type of business, you may need to look to getting a bank loan.

Getting a bank loan for business purposes can be tricky, here’s why.  First, most major banks will not loan to a business without the business being in business for 2 years and have enough gross sales.  Banks are very familiar with the failure rates of startups and have no interest in taking risks on an idea.

The other way around that is the option of taking a personal loan.  Keep in mind, however, that with a personal loan you’re putting your personal credit at risk.  With incorporated businesses, it is the business that is liable if the loan defaults.  

All of this being said, using a loan is usually better than charging a credit card that is not a 0% introductory APR.  Loans typically have a lower interest rate than credit cards.

There are now several other lenders outside of the traditional banking world where acquiring a business loan is possible.  Here are some of your other lending options where you can get a loan online.

Most of these online lenders focus on personal credit scores as opposed to business credit scores.  This is key for new businesses since a new startup would not have had the opportunity to build a solid credit history.

Kabbage-You can borrow up to $150,000 with Kabbage.   No personal guarantee needed to get approved but they may place a lien on business assets.  The loans are in the form of a line of credit which enables you to pull from the line when you need some cashflow.  However, you must have been in business for at least a year and have at least $50,000 in revenue.

Lending Tree-Lending Tree offers loans up to $1 million which is much higher than the other options on our list.  One of the best things about Lending Tree is the fact that they offer startup lending.  That means you can don’t need to be in business or have revenues like many of the other lenders.  However, you need to have a very detailed business plan and be able to convince them to believe in you and your business.

Lending Club-You can borrow up to $300,000 if you qualify for this option.  You also have longer loan terms which are up to five years.  One of the downsides of Lending Club is the required revenue is $75,000 annually which higher than some of the other lenders.

OnDeck-You can borrow up to $250,000 with OnDeck.  Like many of the other options, they may place a lien on the business assets for larger loans.  One of the good things about this option is if you decide to pay the loan off early, they will give you a 25% discount on interest.  One of the things to note is that OnDeck requires a personal guarantee.  That means if the loan defaults, they can come after your personal assets.  So, don’t default.

Not Recommended

Let me first say that you are an adult (probably) and you can make whatever decision you think is best for you.  However, I discourage you from going to the extreme to raise money for your business.  There are some ways to access cash but these should only be used for life emergencies, not for raising money for your business as a way to avoid giving up equity.

Mortgaging your home-You are almost always better off giving up equity in your business than taking out equity in your home.  

Retirement Accounts-If you are able to pull from your retirement accounts without penalty and still have enough of a buffer to take care of yourself in your older age, go ahead and consider this option.  Otherwise, try to avoid using a retirement account to fund your business.  As I mentioned before you will get a 10% penalty for early withdrawal as well as any taxes due (if any).

Loan Sharks-Do I really need to tell you why this is a bad idea?

Ralph Paul on Twitter
Ralph Paul
Ralph is the Managing Editor at StartUp Mindset. The StartUp Mindset team consists of dedicated individuals and is designed to help new, seasoned, and aspiring entrepreneurs succeed.

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Ralph is the Managing Editor at StartUp Mindset. The StartUp Mindset team consists of dedicated individuals and is designed to help new, seasoned, and aspiring entrepreneurs succeed.

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