18 Unconventional Funding Sources for Your Startup: Discovery and Approach Strategies

We secured initial funding through pre-orders combined with a community investment model that traditional investors often overlook. Rather than chasing venture capital in the early days, we created an exclusive “Founding Members” program where fitness enthusiasts could pre-purchase annual athleisure packages at discounted rates in exchange for early access to new collections.

This approach generated ₹18 lakhs in the first 90 days, covering our initial production run without diluting equity. The discovery came from attending local fitness events and noticing how passionate people were about supporting brands aligned with their values, especially around sustainability and ethical production.

We approached gym owners, yoga instructors, and fitness influencers directly, explaining our sustainable mission and offering them special founding member rates. Sixty-three percent of those approached became early backers. What made this work was the transparency — we shared our production timeline, material sourcing details, and even invited members to vote on design elements.

This funding source didn’t just provide capital; it built a committed customer base before launching. Those founding members became our most vocal advocates, generating word-of-mouth worth far more than the initial investment they provided.

Abhinav Puri, Founder, HYPD Sports

Generate Cash Flow Through Client Retainers

When I launched, I bootstrapped my business from the ground up without external investors or loans. But one unconventional funding source I tapped early on was pre-sale client retainers. Instead of seeking outside capital, I approached potential clients with an offer: if they prepaid for a 3 or 6 month marketing package, they’d get priority onboarding and locked-in rates for a year.

It wasn’t traditional “funding,” but it gave me immediate cash flow to cover software, systems, and early hires without giving up equity or control. I discovered this model almost accidentally after realizing that clients valued certainty and exclusivity more than I expected. So I structured retainers like a win-win partnership rather than a transaction.

That single strategy allowed Halo to stay cash-positive from month one and scale sustainably. My advice for other founders: don’t underestimate the funding potential hidden inside your own business model. Sometimes the best “investors” are your future clients if you position the offer right.

Michael Ripia, Founder & Director, Halo Marketing

Pursue State Healthcare Innovation Grant Programs

We looked beyond traditional venture capital to find partners who understood the longer development timelines and compliance demands of healthcare technology. We discovered an unconventional path through a state healthcare innovation grant that funded technology improving clinical workflows.

I learned about it while working with a hospital partner on an EHR automation project. Together, we applied for the grant, demonstrating how our platform could streamline data exchange between their telehealth and billing systems.

The grant was approved within a few months. It provided capital and access to healthcare networks where we could validate and deploy our solutions. That funding helped us complete R&D and launch our interoperability framework ahead of schedule.

It proved that grants can be more than financial support; they can open doors to partnerships and early market traction. For founders, exploring institutional or government-backed innovation funds can be a practical alternative when traditional investors are hesitant to fund complex, long-term projects.

Riken Shah, Founder & CEO, OSP Labs

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Invest Postponed Wedding Funds Into Business

Our wedding fund. My partner and I were supposed to get married in April 2020. Unfortunately, COVID happened and everything was shutting down. We were forced to postpone the wedding and realized the chunk of money we had was just sitting there with no immediate use.

The world was heating up, everyone was stuck at home and people were looking for home activities. People wanted to enjoy the break and the desire for renovating their backyards into better spaces was high. That’s where we got the idea to start selling stock pools. Traditional in-ground pools took forever to construct and were expensive.

We took a risk and used our wedding funds to purchase stock tanks, pumps and the inventory we needed to build the first few pools. It was the best investment we ever made.

Amanda Shaftel, Co-Founder and CMO, Cowboy Pools

Partner With Healthcare Providers for Grants

We creatively approached state innovation grant programs designed to reform healthcare delivery. Unlike traditional venture capital, these grants are non-dilutive. Startups retain full ownership and receive vital funding. For us, in the beginning, this funding was crucial in the early stages while figuring out the market and clinical value of the technology.

Engagement with community healthcare providers and hospital systems helped us identify this opportunity. Most of these organizations collaborate with state health departments on initiatives focused on innovation in chronic care management, telehealth, and value-based payment models. By strategically positioning our digital platform, we were able to take a position as a technical partner in the initiatives, embedding ourselves in system reform, instead of simply being a startup looking for funding.

We worked together with our healthcare partners to develop grant proposals focused on direct clinical impact and alignment with state impact goals. We then focused on understanding the grant and healthcare policy objectives to develop the most relevant proposals. These efforts led to funding that enabled the pilot programs to be integrated within clinical settings, thereby facilitating real-world testing and clinical adoption of the innovative products.

By having early access to these innovative programs, the ecosystem helped us build strategic credibility and relationships at no cost to equity and with no dilution. While challenging to build, the healthcare system provides significant ongoing access to integrated growth. Startups focused on product development in healthcare should prioritize such grants to unlock potential.

The healthcare system strategy points to a critical need to change fundraising strategy to include collaborative healthcare innovation and leverage state non-dilutive funds aimed at improving patient outcomes and system efficiencies.

Peter Silas, CEO, Enable Healthcare

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Bootstrap With Personal Finances and Revenue

This isn’t unconventional in the strict sense, but I would say that in the growing age of AI, where a lot of people tend to seek external funding, we took a different route and instead bootstrapped our startup.

We started the company using minimal capital, using my personal finances and operating revenue instead of external investment. This allowed me to maintain control, though it did make us start out in a very scrappy way. For example, our logo was designed by me using Canva.

Bootstrapping the company helped us think outside the box, look for creative ways to reduce costs, and minimize headcount. In the early days, we limited spending and reduced costs by focusing solely on Google Business optimization and management. I also wore a lot of hats to keep operations lean.

So while bootstrapping might not be considered “unconventional” in the traditional sense, for us it was a strategic choice that helped us build a sustainable foundation without depending on external investors.

Justin Silverman, Founder & CEO, Merchynt

Secure Strategic Partnerships With SaaS Companies

One unconventional funding source I successfully tapped for my startup was strategic partnerships with industry-focused SaaS companies. Instead of going the typical route of venture capital or bank loans, I identified companies whose audiences overlapped with ours and proposed co-marketing and pilot programs in exchange for upfront investment or service credits. I discovered these opportunities by mapping out companies that shared our target market and then reaching out directly with a clear value proposition that highlighted mutual benefits. This approach not only provided capital but also opened doors to valuable networks and early user feedback, proving that creative funding can fuel growth while building strategic relationships.

Georgi Todorov, Founder, Create & Grow

Establish Research Partnership With University Department

Our company joined forces with the public health department at a nearby university to conduct a research study about microbiome education for women. The university public health department supported our research through their help with curriculum development and their contribution of anonymous supplement usage data, which received complete IRB approval. The opportunity became available to us after attending a webinar about academic start-up partnerships. Our approach to this partnership focused on finding common objectives regarding women’s health information access rather than promoting a specific product. The mutual understanding we established with the organization led to access that regular investors would not have granted us.

Hans Graubard, COO & Cofounder, Happy V

Collaborate With Design Schools for Resources

In our initial days, we never pursued traditional investors; we partnered with a local design school. We offered mentorship and, along with that, we provided on-site work experience for students. In return, the institution funded a collaborative design lab.

This whole exercise gave us workspace, talent, and visibility. That partnership helped us create early case studies that later became an attraction point for our paying clients.

The lesson we learned: There is more capital than just money. There is trust, space, and community as well. Sometimes the best funding source is hiding in a mutually beneficial relationship you already have.

Mohit Ramani, CEO & CTO, Empyreal Infotech Pvt. Ltd.

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Create Affiliate Program for Revenue Growth

Instead of seeking venture capital, we created an affiliate program that turned our first users into advocates and revenue generators. We offered generous recurring commissions, which encouraged quality referrals and helped our business grow.

This approach not only provided us with funds but also created a mutually beneficial system. We discovered this strategy while checking out competitor monetization methods using our platform. We realized we could turn it into a growth tool without giving up any equity.

The best funding could be in your customer base as long as you have the right rewards system.

Hiren Shah, Owner, Anstrex

Leverage Government Grants for Nonequity Capital

We found great success with government grants, which many startups overlook as a funding source. Our company received $150,000 from the Arizona Innovation Challenge and another $25,000 through the Arizona Commerce Authority’s Fast Grant program. We discovered these opportunities through local business development resources and approached them by clearly showing how our innovation aligned with the state’s economic development goals. The application process was competitive but worthwhile since these grants provided non-dilutive capital that helped us grow without giving up equity.

Brett Farmiloe, CEO, Featured

Obtain Funding Through Strategic Pilot Programs

Our company obtained initial project funding through a strategic pilot program with a mid-sized insurance organization. Our company provided a high-priority claims processing module to the insurance company along with customized SQL Server infrastructure and identity system integration. The contract provided us with sufficient funding to bring in new staff members and make rapid development progress.

Our team found this business opportunity through a former customer relationship that led to a VP position at the company. The solution required us to present ourselves as a dependable engineering team which would resolve their current processing bottleneck. The development of a functional MVP using .NET Core and Angular within four weeks established both trust and momentum with the client.

Igor Golovko, Developer, Founder, TwinCore

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Utilize National Innovation Startup Support Program

One of my effective initial sources of funds was in the form of an unusual source of money. It was a government grant issued by the Ministry of Science and Technology of Vietnam known as the National Innovation Startup Support Program. This was not just regular venture capital. The non-dilutive money had assisted local tech and businesses in expanding, which aligned well with the objective of incorp.asia to ease the services of the company within the Southeast Asian region.

I came to know of this grant during my trip to entrepreneur workshops in Ho Chi Minh City in 2018. I was a newcomer who was attempting to combine my Canadian expertise with the Vietnamese market and was willing to expand without losing excessive equity. One of the workshops on funding opportunities had a ministry panelist discuss the grants. I immediately scheduled a one-on-one meeting with their office. My pitch was brief and to the point, demonstrating that our platform would help foreign investors overcome the regulatory issues in Vietnam, with market data and a demo. It fit their objective of economic diversity, and I received approximately VND 500 million (approximately USD 20,000) in seed capital.

This experience allowed me to conclude that regional policy incentives can be quite helpful to international founders. They not only provide valuable funding, but they also provide credibility, which contributes to the attraction of more partners and clients in a difficult market.

Jack Nguyen, CEO, InCorp Vietnam

Access Local Enterprise Support Grants

One unconventional funding source we successfully tapped into was a local enterprise support grant designed to help small businesses adopt digital tools and expand their online presence. Many startups focus only on traditional financing sources such as bank loans or private investment. Still, local and government-backed programs can be a significant boost, especially in Ireland, where regional enterprise offices are very active in supporting growth.

We discovered this opportunity through our Local Enterprise Office (LEO) in Dublin while looking for ways to modernize our booking system and improve digital security. The grant wasn’t widely advertised, but by attending a small business workshop hosted by the LEO, we learned it could help cover part of the cost for upgrading software, improving our website, and enhancing online customer experience. We applied with a clear business case, showing how digital investment would improve efficiency, create jobs, and better serve customers across Ireland.

Securing that funding gave us the flexibility to implement real-time booking and payment systems sooner than expected, which became a turning point for our business. My advice to other Irish startups is to look beyond traditional financing and explore local supports, enterprise programs, and innovation grants. Often, the best opportunities are closer to home, and taking the time to build a relationship with your local enterprise office can open doors you didn’t know existed.

Nick Simons, Owner, Storagehub

Explore SPAC Incubation and Reverse Mergers

Fundraising through Special Purpose Acquisition Company (SPAC) incubation and reverse mergers was a non-traditional way of fundraising, which represented more than a departure from the traditional venture capital model. We targeted partners with existing shell companies that had achieved existing public market listing status but did not have active business lines.

The strategy was to identify an underperforming or dormant SPAC whose charter was consistent with technology consolidation. We approached the SPAC management team with tangible revenue and proprietary technology from our SaaS tools like NobleSEO.io and H1seo.io to demonstrate to them the spot market demand. This was marketed as an operating asset with high growth potential that could be injected into their dormant structure, which would allow them rapid and efficient access to capital from the public markets without going through the lengthy process of an Initial Public Offering.

Paul DeMott, Chief Technology Officer, Helium SEO

Partner With Tourism Board for Equipment

An unconventional funding source I successfully tapped for my photography business was partnering with the Myrtle Beach tourism board. Instead of applying for a loan, I approached them with a proposal to create a collection of professional images showcasing the local beaches and attractions for their marketing campaigns. In exchange, I received funding for new equipment and significant exposure through their promotional materials. I discovered this opportunity while networking at a local small business event and realized that my photography could serve both my business and the community. The partnership helped me grow my portfolio, build credibility, and attract new clients who had seen my work featured in tourism ads. It was a creative way to finance my growth while giving back to the place that inspired my business in the first place.

Kristina Barron, Professional Photographer, Kristina Barron Photographer

Use Government Subsidies for Energy Efficiency

One of the most successful tools we’ve used has been government grants and subsidies aimed at improving housing energy efficiency (for example, the Canada Greener Homes Grant). These programs essentially offset some of our clients’ costs, but also indirectly finance our growth by creating demand for our products and supporting capital investment. We don’t just receive government funding — we create a financial environment that makes it easier for clients to buy and for businesses to grow.

We’ve also established partnerships with local banks that offer loans and installment plans for energy-efficient windows. This isn’t a direct investment in the company, but in practice, it lowers the barriers for clients and increases sales without the need for a marketing blitz. During the initial stages of development, we set aside a small amount of money for pilot projects — for example, testing new window systems and mounting technologies. This allowed us to be less dependent on bank loans at the start and more quickly test new hypotheses.

Alexander Havkin, Regional Manager, Ecoline Windows

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