Raising money from a Venture Capital (VC) firm is extremely challenging. The odds of getting funded by  Andreessen Horowitz is just 0.7%, so it’s important to look at different funding options. Venture capitalists fund approximately 1,500 startups in the US, while angel investors fund 50,000.

Putting all your eggs in one basket isn’t wise. Diversify your financing sources to increase your chances of getting enough money for your startup. Showing that you've sought different financing alternatives shows lenders you're a proactive entrepreneur. Here are some of the best ways to fund your startup.

Pitch to Venture Capitalists

In 2022, almost $90 billion of venture capital funds raised in the US were invested in software companies. Venture capitalists invest money in businesses that show potential for significant growth over the short term—small businesses, mid-sized companies, and global enterprises.

But this funding source is not ideal for all entrepreneurs. Venture capitalists typically invest in technology-driven businesses with high-growth potential. They get equity in the company and expect a good return on their investment. ROI is usually generated when the startup sells shares to the public. Look for investors who bring expertise to your business.

Connect with Angel Investors

Angel investors helped start many popular companies, including Google and Yahoo. These wealthy individuals invest directly in small startups and are often industry experts who contribute their expertise and network of contacts. Angel investments are typically between $25,000 to $100,000. 

In return for giving you their money, they supervise your company to ensure it moves in the right direction. An angel investor may ask for a seat on the board of directors and equity. Angels keep a low profile, so you must contact specialized associations or visit specific websites to find them.

Apply for a Small Business Loan

This is another straightforward option for financing your startup. Lenders will want to know why you need the loan and how you plan to use it, so be open. Explain if you need the money to support your business structure or for everyday expenses. You can get loans from banks, nonprofit microlenders, The Small Business Administration (SBA), or online lenders.

Some online lenders give collateral loans and don’t ask for a stake in your company. If you’re starting small, a title loan is ideal because you only need a vehicle with positive equity. To find the best lenders in your locality, simply search for “car title loans near me.”

Try Crowdfunding

Oculus, the popular virtual reality headset, was launched on Kickstarter. The company was seeking $250,000 to build the Oculus Rift headset. The campaign achieved its target in four hours, eventually raising $2.4 million. Facebook later bought Oculus for $2 billion.

Crowdfunding is a type of fundraising where a startup asks the public for funding, usually in exchange for equity in the company. It's a low-risk way to raise capital for your business. Unlike venture capital or bank loans, you don't need to give equity in your business or put up any collateral.