By Emily Greene
The journey of entrepreneurship often begins with a great idea and a burning passion. But what sustains and propels these startups and small businesses forward? It’s the innovative and varied landscape of funding mechanisms available to entrepreneurs. We snagged some time with rural founders in our network to explore how they pursued capital, in all its forms.
Revenue
For founders who value full control of their business, bootstrapping offers a self-reliant funding approach. This method involves using internal profits to fund operations and growth, rather than seeking outside investment or loans.
While bootstrapping doesn’t provide the immediate influx of capital that comes with other funding mechanisms, it allows founders to maintain independence and avoid debt or equity dilution. The trade off is that bootstrapping doesn’t always allow for rapid scaling.
It’s a funding method that relies on a business having a positive cash flow, which can be difficult to maintain when a startup is getting off the ground. When done well, it can support sustainable growth and long-term success without the distraction of courting outside investments.
The former owner of Thrive Yoga (and Startup Colorado Executive Director), Brittany Romano, didn’t have the option to seek outside funding when she first purchased her business. She relied on revenue alone to grow her yoga studio.
She said, “It helped me learn to maximize every dollar that came into the business. Early on, I didn’t have a lump sum of money in the bank, so I couldn’t make large investments or dramatic changes. I learned that money buys you time, but fortunately I was young and I had time on my side.”
Though bootstrapping can teach a founder valuable skills, it’s not for the faint of heart.
“My advice might sound a little hypocritical because I don’t recommend bootstrapping a business unless you are mentally resilient and physically prepared to endure those early, slightly impoverished days.”
Grants
Grants are often designed to support specific initiatives or advance particular causes. While commonly associated with nonprofits, grants can also offer startups or small businesses a valuable source of capital. For founders, the primary appeal lies in the fact that grants don’t require repayment, making them a risk-free way to secure funding.
However, grants come with strings attached. Applicants must meet detailed eligibility criteria, often tied to the grantor’s mission or goals. Once awarded, businesses may need to adhere to strict reporting requirements, deliverables, and deadlines to ensure accountability. This means grants aren’t simply “free money”; they require careful planning and diligent follow-through.
For businesses with missions that align closely with a grant’s focus, this funding can be a powerful tool to advance their goals.
At first, Dani spent hours pursuing funding on a per-project basis—primarily in the form of sponsorships from outdoor industry companies. Then, in early 2024, she received a grant from the National Association of Latino Arts & Culture. It enabled her to diversify her funding portfolio to include grants, direct sponsorships, crowdfunding, and impact partnerships.
“I pursued this grant because I had higher confidence that the funding organization would see value in the story itself. There’s an important lesson here for other creatives, whether they’re freelancers, solopreneurs, or even content creators. Know what your story is about, who can get behind it, and what’s in it for them.”
Dani Reyes-Acosta is a Mestiza and Filipina filmmaker who launched Afuera Productions—a documentary and branded storytelling production company—in 2022. She said that the business evolved rapidly and her search for funding explored a variety of mechanisms.
“I knew that raising funds through the traditional route of corporate sponsorships and brand partnerships alone wouldn’t be sustainable—not for me or for any team members I’d bring on board.”
Her goal was to find a funding mechanism that would ensure fair compensation and reciprocal impact to all stakeholders, from film participants to crew members to even the local communities who hosted them.
Traditional Loans & Micro-loans
Traditional loans and microloans are two common funding options that provide entrepreneurs with access to capital without giving up ownership of their business. These loans, structured similarly to a mortgage or car payment, are provided by banks or large financial institutions. Founders receive a lump sum of capital and repay it over time with interest.
The key advantage? Traditional loans don’t require founders to take on risk at their own expense and can avoid assuming personal debt. However, eligibility requirements like credit score minimums or collateral obligations can be a barrier. On the upside, traditional loans often offer a flexible line of credit that can be used for anything from product development to operational costs.
Microloans cater to founders needing smaller amounts of capital, particularly those in underserved communities. These are often significantly smaller than a traditional loan—in fact, the first micro-loan was $27!
Platforms like Kiva or DreamSpring connect entrepreneurs with global supporters, offering loans as small as $5.00 without requiring collateral or extensive credit history. Many microloans, capped at $15,000, are interest-free—a significant benefit for small business owners starting out.
Bike rack manufacturer QuikrStuff opened for business right at the beginning of the 2020 pandemic. Despite high demand for their racks, the global supply chain crisis impacted QuikrStuff’s capacity to deliver their products on time.
To help mediate this issue, founder Bryan Wachs sought an infusion of capital to increase QuikrStuff’s manufacturing capacity. Instead of relying on a traditional financial institution, QuikrStuff was granted a loan through Energize Colorado’s community loan program.
In an Energize Colorado blog, Wachs said, “Capital for small businesses, especially new businesses, is broken. Banks are overprotecting capital that needs to be reinvested in their communities. Real Estate investments are good and safe, but don’t put fluid cash into the economy to circulate.”
Wachs used these funds to increase operational efficiency and require the raw materials needed for manufacturing.
Crowdsourcing
Maybe the most exciting way to fuel a startup is through crowdsourcing. Crowdsourcing is a funding method where a large number of people each contribute a small investment to support a startup, product, or idea. Typically, crowdsourcing campaigns take place online on platforms like Kickstarter, Indiegogo, or Kiva, which offers crowdfunded business loans.
These campaigns can help a founder create a community of support around their business. An upside to crowdfunding is the low barrier to entry. It’s low risk, and doesn’t require any strict formalities like a traditional loan, grant, or investment might. However, it takes a significant marketing effort for a crowdfunding campaign to succeed.
Inspired by a pair of shorts her mom wore to keep warm on the chairlift, Kelly Mazanti-Nelson founded the outdoor apparel company Buttnski. After completing the Startup Colorado Founder Coopetition // Idea Factory pre-accelerator program, Kelly turned to the crowdfunding platform Kiva to raise capital.
With the help of a local Kiva advisor, Buttnski was able to complete multiple rounds of fundraising (both private and public). Kelly’s friends and family were instrumental in sharing the story of her business. Without much in the way of capital or collateral, Kelly was able to leverage her network to secure funds to grow her business.
She said, “[The Kiva Loan] helped offset our costs for a few months to finish product development and be prepared to go into production.”
Venture Capital
Venture capital has been a driving force behind some of the most transformative businesses of the last century, from Apple to Spotify. Despite the splashy headlines, venture capital remains a relatively rare funding avenue—less than 1% of startups ever secure it. However, for the right business at the right stage, it can be a game-changer.
Founders gain not only a significant infusion of capital but also access to the investor’s network, expertise, and resources, which can accelerate growth and open doors to new opportunities. However, VC isn’t for everyone. By granting equity, founders give up part ownership, which may lead to a loss of some control over their business.
When DifferentKind co-founders Dr. Matt Allen and Dr. Carolyn Brown started their company, they relied on bootstrapping and customer discovery to develop an initial prototype for their dental enterprise software. However, neither founder had a technical background, and scaling their idea required building a robust technical team and a scalable software solution—investments that demanded substantial funding.
Venture capital became a natural fit. Enterprise software in healthcare aligns well with the VC funding model, offering the potential for significant growth and scalability. With initial investments from Greater Colorado Venture Fund and the CORI Innovation Fund, DifferentKind was able to hire their first employees, accelerate software development, and expand their marketing strategy.
More than just capital, their VC partners brought expertise, connections, and support.
“Both of them (GCVF and CORI)… I think really are all amazing partners, with varied and different expertise that we can tap into; that we can really utilize, which has been incredibly helpful.”
Equity
Equity financing is an option for startups seeking capital to fund growth. By selling portions, or “shares”, of the company to investors, businesses are able to secure funding that does not need to be repaid. This strategy can be especially useful for entrepreneurs who would rather avoid loans.
Venture capital funding is sometimes considered a subset of equity investing, but a key difference is the timing of the investment. VC happens early on in the development process, while equity investors target more mature companies.
A drawback of equity financing is the loss of control. Each investment dilutes the ownership by a small percentage. Investors have the ability to weigh in on important decisions, and also will share in any future profits.
Initially, the outdoor bathroom kit company PACT Outdoors was operating on revenue and the personal funds of its founders alone. Co-founder Noah Schum and his partners sought out a “Money+” solution that would provide PACT with the capital it needed to grow faster.
The PACT team wanted an equity partner who believed in their business idea and the team they already had in place, but could offer resources and knowledge. They too partnered with GCVF.
Schum said, “While funding did not solve every issue, it was absolutely the accelerator that we had planned on.”
The first year after receiving funding, PACT saw a 300% increase in year over year revenue. The brand was also able to partner with two universities for research projects and move into their first office space.
There’s no one-size-fits-all solution when it comes to funding a business. Each mechanism—whether venture capital, loans, grants, bootstrapping, or crowdsourcing—offers unique benefits and challenges. The key is understanding which aligns best with your business’s goals, stage, and values.
By exploring these diverse options and learning from the experiences of others, founders can make informed decisions that set their ventures on a path to success. In the end, the right funding choice is the one that helps you sustain and scale your vision while staying true to your mission. To learn more, check out the funding resources offered by Startup Colorado:
