At some point, almost every founder asks: How do I get a VC to fund my company?
Many believe venture capital is the only path to success. But here’s the overlooked truth: most billion-dollar companies didn’t become great because they raised VC money. They were already on the path to greatness, and the VCs simply bought into it.
What if you could scale your business on your own terms? What if you could stay in control, build real traction, and wait for the right investor when the time feels right for you?
Here are six debt financing options that can help you do exactly that, designed for startups that aren’t ready (or willing) to take VC money just yet.
This might seem obvious, but bootstrapping with your personal funds is often the most overlooked financing option. Many founders rush to raise external capital before fully exploring what they can accomplish with their own resources.
"How much should I invest from my own pocket?"
The answer depends on your personal financial situation and risk tolerance. Some founders invest their entire savings, while others set aside a specific amount they're comfortable losing. The key is being realistic about what you can afford without jeopardizing your family's financial security.
This is often the first capital a startup raises. It involves asking for loans from your personal network: family, friends, or even early mentors. These are typically structured as convertible notes.
A convertible note is a loan that changes into equity at a future funding round. It’s a simple way to get seed capital with low interest rates.
For established SaaS companies, your recurring revenue is a powerful asset. Two popular methods let you borrow against it: an MRR line of credit and A/R factoring.
An MRR line of credit is designed specifically for subscription-based businesses like SaaS companies. Instead of looking at physical collateral, lenders use your monthly recurring revenue (MRR) to determine your credit limit.
Lenders typically offer a credit line that is a multiple of your MRR—often between 3x and 6x. This gives you flexible access to cash for funding sales and marketing, making key hires, or managing cash flow gaps between customer payments. Because it’s based on your revenue strength, it’s a funding model that understands and rewards sustainable growth.
Does your business invoice customers on Net 30, 60, or 90-day terms? Waiting for those payments can create a cash flow crunch.
Accounts receivable (A/R) factoring solves this by letting you sell your outstanding invoices to a third-party company (a "factor") at a discount. You get a large portion of the invoice value—typically 80% to 90%—upfront. The factor then collects the full payment from your customer and pays you the remaining balance, minus their fee.
This isn't a loan, but a cash advance that smooths out unpredictable payment cycles and gives you immediate working capital.
“Wait, isn’t venture debt only for VC-backed startups?”
Not anymore. While venture debt is common after an equity round, a growing number of specialized lenders now offer it to strong, non-VC-backed companies.
Venture debt is a type of term loan designed to help you hit key growth milestones without giving up ownership. You can use the funds to:
Unlike bank loans, venture debt providers understand the tech business model. They focus on your growth potential, revenue quality, and management team. The loans often include an interest-only period, giving you breathing room to let your investments pay off before principal payments begin. In some cases, lenders may ask for warrants (the right to buy a small amount of equity in the future), but the dilutive impact is minimal compared to a venture round.
Explore if venture debt is right for you in our Founder’s Guide to Venture Debt or apply for funding.
Revenue-based financing (RBF) is another alternative for early-stage startups. Instead of a fixed monthly payment, you repay the loan as a small, agreed-upon percentage of your monthly revenue.
Here’s how it works:
When revenue is high, you pay back more. When it’s a slow month, your payment is smaller. This built-in flexibility protects your cash flow during downturns and lets your lender share in your success without taking equity. RBF is ideal for funding scalable initiatives like digital marketing or sales team expansion, where the return on investment directly drives revenue.
1. What if my company is too early for financing?
If you are brand new and have almost no revenue, the personal route (friends, family) might be your only option.
2. Will I lose control of my company with debt financing?
In most cases, you have more control with debt than if you gave away equity. You do need to make scheduled payments, but you keep your ownership. Just stay on top of your repayment plan.
3. Can I combine different types of debt financing?
Yes, and it’s often a smart strategy. A founder might use an MRR line of credit for day-to-day working capital needs while using a venture debt term loan for a specific, large growth project like international expansion. Using different funding tools for different purposes allows you to optimize your capital structure and minimize your cost of capital.
