Hi,
This week I explore alternative financing to grow your business- VC is far from your only option.
Also;
📸 - Social Snapshot- Unnecessary stealth
đź“Š - Back to reality for funding
🎙️ - Episode 62: Shutting down the right way with Dori Yona
🆓 - Your 12-month fundraising plan
Welcome to issue #98!
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đź’ˇThoughts on ideas vs execution by Andrew Gazdecki on X
Also:
🛣️ A light take on product road mapping by Elena Verna on LinkedIn
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Episode 62: How to Gracefully Exit Your Startup with Simple Closure's Dori Yona
In the latest episode, I talk to Dori Yona of Simple Closure about a topic that lots of founders consider taboo: shutting down.
The reality is that many startups will have to wind up, but how can you do it without spending thousands of dollars and lots of time? Dori tells all.
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Data Corner
Back to normal for funding
Still nostalgic about the record-breaking year that was 2021? It's time to move on. In 2024, US companies on Carta raised around $21B per quarter—better than last year’s $18B but nowhere near 2021’s $55B high.
That boom distorted expectations, but as you can see in the infographic, things have just returned to the status quo. So don't give up hope.
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Raising Capital for your startup?
Thunder's mission is to guide founders toward the right path to reach their North Star, be it through securing equity or debt financing or navigating the path to a successful exit.
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Beyond VC: 5 Creative Ways to Fund Your Startup Without Diluting Equity
This week's take might seem a bit mad, especially as I support founders to access equity here at Thunder, but I'm getting a bit annoyed seeing some founders act like VC is the only way to go to scale. Securing capital has become the north star for some, and investor relations have taken priority over building.
This doesn't have to be the case- there are so many founders who have seen success (in its many definitions) without having to go the VC route. Plus, giving away huge chunks of equity just to keep your startup afloat sucks.
Venture capital can seem like the only lifeline, but the trade-off can be brutal. You’re bringing on investors, sure, but you’re also slowly watching your ownership shrink. By the time you’ve done a couple of rounds, you could be left with less than 50% of your own company.
Here’s the harsh truth: a typical VC round will see you giving up 20-30% of your company, and after multiple rounds, that dilution can feel like death by a thousand cuts. Carta (no, we are not sponsored by them) shared this data on equity sold by venture round in the US, and if you're looking at an average of 15% dilution per round- that won't leave you with much.
VC isn't the only way to fund your startup though, and you don’t have to give up any equity if you play your cards right. I touched on 5 ways to grow without selling stakes to VCs. Check them out below.
1. Revenue-Based Financing: Pay as You Grow (No Equity Lost)
You can raise money without signing away a piece of your company. How? Revenue-based financing (RBF). Instead of giving away equity, you repay a lender with a percentage of your monthly revenue until the loan is paid off. The beauty of RBF is that the payments adjust based on how well you’re doing—meaning slow months won’t break the bank.
Clearbanc (now Clearco) is one example. They've invested over $2 billion in startups without taking a single share of equity. They just take a small cut of your revenue, so you keep control and grow at your own pace. It’s like the anti-VC—no board meetings, no giving up power.
2. Crowdfunding: Let the Crowd Buy Into Your Vision, Not Your Equity
If you've got a solid product and a loyal following, crowdfunding can be a game-changer. Instead of trading equity for cash, you’re pre-selling your product to the very people who’ll use it. It’s like getting your customers to front you the cash to build your business.
We've all heard the Kickstarter success stories. If you hack it, there's a lot of cash, and without having to give up a single share of equity. Of course, running a successful crowdfunding campaign isn’t as easy as posting and praying—you’ll need a solid marketing plan and a passionate community to back you. But if you can build that hype, it’s one way to raise capital while keeping ownership intact.
3. Grants and Competitions: Free Money, No Strings Attached
Who doesn't love free money? I know I do. Grants and startup competitions can be a founder’s dream come true because, unlike investors, they don’t ask for any equity in return.
The Small Business Innovation Research (SBIR) program in the US doles out millions in grants to startups every year, and there’s not an investor in sight. Winning a startup competition can also come with a nice chunk of change (plus exposure and networking opportunities). The only downside is that they’re competitive, but hey, if you’re going to pitch anyway, why not do it for a cash prize?
4. Venture Debt: Borrow Smart, Stay in Control
Venture debt is another option for founders who want to scale but aren’t keen on giving away more equity. I've talked about it before here, but I'll explain it anyway for the new readers. Unlike traditional loans, venture debt is designed specifically for startups, often with more flexible terms. The best part? No equity dilution. You get the capital you need, and you only owe the lender a repayment—plus interest, of course.
Good news, I support founders to access venture debt and working capital. It’s a smart move when you're growing fast and need cash, but don't want to give up control. Interested? Apply here.
5. Strategic Partnerships: Get Paid for Your Expertise
Imagine a bigger company knocking on your door and saying, “We love what you’re doing—how about we pay you to keep doing it?” That’s essentially how strategic partnerships work. You form an agreement where they provide funding or resources in exchange for access to your tech, product, or market—without giving away equity.
Spotify did it to support their expansion and I don't need to tell you that they are now a global brand.
Venture capital isn’t the only way to raise funds, and it might not even be the best way, depending on your goals. Whether it’s revenue-based financing, venture debt, or strategic partnerships, there are plenty of ways to get capital without having to sell off pieces of your company.
So, the next time you’re staring down a term sheet and thinking about how much equity you’re about to lose, pause for a second. Explore these non-VC options—you might just find a way to keep your business (and your equity) fully in your hands.
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Let's stay in touch:
- Written by Jason Kirby - https://www.linkedin.com/in/jasonrkirby
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