Faye McDonough

Apparently there are only two ways to fund a business in 2025: Bootstrap or raise (from Angels/VCs).

At least that’s what my LinkedIn feed would have me believe…

Perhaps it’s the algorithm, maybe it’s my small corner of the internet… but my online world only shows these two paths.

With so many funding options available, suitable at different stages of growth, are we doing founders and business owners a disservice by narrowing the conversation to just raise vs don’t raise?

Picture below of another ridiculously over-simplified choice from the start of Hadrian’s Cycleway in Ravenglass!

The Problem with Binary Thinking

The bootstrap-or-raise narrative dominates startup conversations, but it creates a false choice that can limit business potential.

My perspective is no doubt influenced by a career supporting businesses through various means of funding – from working capital facilities, asset finance, cashflow loans, venture debt, commercial mortgages and flexible overdrafts.

Over the last 20+ years, I’ve seen the full range of finance available, but so few of these options feature in the conversations I have with business owners.

The Missing Question

The questions that I don’t hear asked enough are: Where do you want this business to take you?

For some business owners, wealth creation is the driver and so they have an exit in mind. For others, it’s about achieving a decent salary, good work/life balance and building some savings for a holiday home purchase in the future.

When you know the answer to that question, I recommend aligning your funding pathway to that vision.

A lifestyle business with steady growth needs different funding than a startup planning rapid scaling and eventual exit. There’s no right or wrong answer – just different paths requiring different financial strategies.

Your reflection: What does success actually look like for your business? Are you building for exit, lifestyle, or something else entirely?

The Full Funding Spectrum

Here’s a quick overview of funding options that rarely get mentioned in the bootstrap-vs-raise conversation:

Debt-Based Options

Secured (or unsecured) Loans: Traditional lending with fixed repayment terms, often suitable for established businesses with predictable cash flow.

Revenue-Based Financing: Repayments tied to monthly revenue, offering flexibility during seasonal fluctuations.

Merchant Cash Advances: Quick access to capital based on future card payment receivables.

Invoice Finance: Unlock cash tied up in outstanding invoices without waiting for payment.

Purchase Order Financing: Fund large orders when you have confirmed customers but need working capital.

Asset & Equipment Financing

Asset Finance: Spread the cost of essential equipment while preserving cash flow.

Stock Finance: Fund inventory purchases, particularly valuable for seasonal businesses.

Property Finance: Commercial mortgages and property-backed lending for businesses needing premises.

Alternative Sources

Government Grants: Non-repayable funding for businesses meeting specific criteria or operating in target sectors.

Tax Incentives: R&D credits, EIS/SEIS schemes that reduce the cost of business activities.

Crowdfunding: Build community, validate products, and raise funds simultaneously.

Subscription Models: Pre-selling products or services to fund development and operations.

Customer Deposits: Having customers pay upfront for custom work or pre-orders.

Each option serves different business models, growth stages, and risk appetites. The key is matching the funding type to your specific situation and goals.

Your reflection: Which of these funding options might suit your business model and growth stage? What would you need to explore them further?

Real-World Perspectives

When I shared these thoughts on LinkedIn, friends commented on their own experiences:

Early-stage founders feeling limited: Many believe they only have two options available, but there’s always a different path when you look beyond the dominant narrative.

Successful crowdfunding stories: One friend shared how crowdfunding helped build advocacy, community, future revenues AND raised investment – proving that funding strategies can serve multiple purposes simultaneously.

Echoes of similar experiences: Other finance professionals confirmed seeing the same narrow conversation despite the broad range of options available.

These responses reinforced that the funding conversation needs broadening beyond the startup-focused bootstrap-or-raise debate.

Choosing Your Funding Strategy

The right funding approach depends on several factors:

Business model: Recurring revenue businesses have different options than project-based ones.

Growth timeline: Rapid scaling requires different funding than steady, sustainable growth.

Risk tolerance: How much control are you willing to give up? How much debt can you service?

Industry requirements: Some sectors need significant upfront investment, others can start lean.

Personal goals: Your vision for the business should drive your funding strategy, not the other way around.

Your reflection: How do your personal goals for the business align with different funding approaches? What trade-offs are you willing to make?

Questions for Your Funding Strategy

Before defaulting to the bootstrap-or-raise choice:

• What does success look like for your specific business and personal situation?
• What funding challenges are you actually facing right now?
• How much control are you willing to share or give up?
• What’s your timeline for growth and potential exit?
• Which funding options have you researched beyond equity and bootstrapping?
• How does your business model affect which funding types might work?

Broadening the Conversation

Is it just me, or do the bootstrap/raise voices get disproportionate attention compared to the full spectrum of funding options?

The dominance of this narrative might be because:

• Venture capital stories make compelling content
• Bootstrap success feels inspirational and accessible
• Other funding options seem less exciting or harder to understand
• The startup ecosystem naturally focuses on high-growth, equity-funded businesses

But many successful businesses use hybrid approaches, combining multiple funding types as they grow and evolve.

Moving Forward

I’m really interested in your perspective on this. Have you felt limited by the bootstrap-or-raise conversation? What funding options have worked for your business that don’t get enough attention?

Do you have recommendations for people to follow who provide broader insight into business funding options?

The goal isn’t to complicate funding decisions, but to ensure business owners know about all their options before choosing a path that aligns with their actual goals rather than the loudest voices in their feed.

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As mentioned, I took this picture of another ridiculously over-simplified choice at the start of Hadrian’s Cycleway in Ravenglass! Sometimes the real path is more nuanced than the obvious options presented.