You have a killer business idea. You’re ready to launch, but there’s one big problem—money.
You need funds to build your product, market it, and scale. But where do you get the money? Should you bootstrap? Look for investors? Take out a loan?
Most first-time founders in Nepal struggle with this exact dilemma. The good news? You don’t need to be a Silicon Valley insider to raise capital. From bootstrapping to venture capital, there are many ways to fund your startup—you just need to find the right one for your business model, growth plans, and risk tolerance.
This guide is your one-stop resource for understanding startup funding. By the end of this blog, you’ll have a clear roadmap to funding success—minus the jargon, confusion, or unnecessary fluff.
Do You Even Need Funding?
Before chasing investors, ask yourself:
Do I really need outside money, or can I start lean?
Many successful startups bootstrap in the beginning. That means using your own savings, reinvesting early revenue, or even freelancing to fund your business.
Bootstrapping works if:
You can launch with minimal costs.
You don’t want to give up control.
You’re okay with slower growth.
But if your startup needs money for things like manufacturing, tech development, or rapid scaling, you’ll need external funding.
Best Ways to Get Startup Funding: Know Your Funding Options
Not all money comes from the same source. Some entrepreneurs build their businesses using personal savings, while others attract investors or secure loans. The right funding option depends on your business model, financial needs, and long-term goals.
Here’s a breakdown of the most effective ways to fund a startup:
Bootstrapping (Self-Funding)
Bootstrapping is the simplest way to fund your startup—using your own money instead of relying on external investors. This could come from
Using personal savings or income.
Full control, no investors telling you what to do.
Works best for service-based businesses or digital products with low costs.
It’s a great option if you’re starting something lean—like freelancing, consulting, coaching, or an online business.
Sounds doable, right? If you’re willing to start small and grow smart, bootstrapping can be your best friend.
Friends & Family
If you don’t have enough savings to bootstrap your startup, the next closest source of funding is friends and family. This involves borrowing money from people who trust you—parents, siblings, close friends, or extended family—who believe in your business idea.
Things to Keep in Mind
Money Can Strain Relationships – Mixing business and personal relationships can lead to conflicts.
Set Clear Expectations – Always document the terms, even if it’s informal, to avoid misunderstandings.
Risk of Losing Their Money – If your business doesn’t succeed, will you be able to repay them? Be upfront about the risks.
If done right, friends and family can be your first investors—just make sure the relationship stays intact.
Bank Loans & Government Grants
If you need more funding than what friends, family, or personal savings can provide, bank loans and government grants are solid options. They offer structured financing but come with different eligibility requirements and repayment terms.
Pros:
✅ Keeps Your Equity – You don’t give up ownership like you would with investors.
✅ Structured Financing – Banks provide clear loan terms and repayment schedules.
✅ Can Help Build Business Credit – Good loan repayment history boosts your creditworthiness.
Cons:
Hard to Qualify – Banks require a strong business plan, good credit score, and financial history.
Interest Rates & Collateral – Loans come with interest, and some require assets as security.
Repayment Pressure – Even if your business struggles, you must still make payments.
Things to Keep in Mind
Loans must be repaid, even if your business struggles, you must still make payments. So don’t take more than you can handle.
Look into banks like Nabil, Siddhartha, and government grants like the Yuva Udyamshilata Karja.
Angel Investors
If you’re looking for funding beyond personal savings, loans, or grants, angel investors could be a game-changer. These are high-net-worth individuals who invest in startups in exchange for equity (a share in your company). Unlike traditional lenders, angels often bring experience, mentorship, and valuable connections along with their money.
Why Consider Angel Investors?
✅ More Than Just Money – Angels provide mentorship, industry insights, and networking opportunities.
✅ Flexible Terms – Unlike banks, they may not require fixed repayments. Instead, they share risks and profit when your business grows.
✅ Faster Than Venture Capital – Angel funding is usually quicker and less formal than venture capital deals.
Challenges of Angel Investment
Equity Trade-Off – You must give up a percentage of your company in exchange for funding.
High Expectations – Angel investors expect scalability and strong returns, which can add pressure.
Finding the Right Fit – Not all investors align with your vision, so choosing wisely is crucial.
Venture Capital (VC) Funding
If you’re building a startup with high growth potential, venture capital (VC) funding might be the right path. Unlike angel investors who invest their own money, VC firms manage pooled funds from multiple investors and invest in startups in exchange for equity (ownership stake).
VC funding is often used by fast-scaling startups in industries like technology, fintech, health tech, and e-commerce, where rapid expansion requires significant capital.
Challenges of VC Funding
Equity Trade-Off – VC firms take a significant share of your business.
High Expectations & Pressure – VCs expect fast scaling and high returns, often pushing for aggressive growth.
Not for Every Business – VCs typically avoid small, slow-growing businesses and look for startups with billion-dollar potential.
Crowdfunding
Crowdfunding allows you to raise startup funds by collecting small contributions from a large number of people, usually through online platforms. Instead of relying on a single investor or bank loan, you can tap into your community, social networks, or global supporters to fund your business.
Things to Keep in Mind Before Crowdfunding
Crowdfunding is not “free money” – It requires a well-thought-out campaign, strong marketing, and continuous promotion to attract backers.
You need a compelling story – People fund ideas they connect with. Clearly communicate why your product matters and how it solves a problem.
Prepare for upfront costs – Even before you raise funds, you may need to invest in prototypes, marketing, and a campaign video to build trust.
When Should You Raise Money?
Timing is everything. Raising funds too early can mean losing equity before proving your idea works. Raising too late can mean missing out on growth.
The best time to seek funding is when:
✔️ You have a working prototype or MVP.
✔️ You’ve validated demand—customers are interested.
✔️ You know how you’ll use the money to scale.
If you’re just at the idea stage, investors probably won’t bite. Build something first.
Common Funding Mistakes (And How to Avoid Them)
🚨 Raising too early – If you don’t have a product or customers, focus on building before fundraising.
🚨 Giving up too much equity – Don’t sell a big chunk of your business for little money. Think long-term.
🚨 Not having a clear plan – Investors don’t fund vague ideas. Show exactly how you’ll grow and make money.
🚨 Chasing the wrong investors – Not all money is good money. Pick investors who align with your vision.
What’s Next? Find the Right Support
Funding is just one part of building a startup. Even if you raise money, you still need guidance, a solid strategy, and the right network.
That’s where Mentor Who comes in.
Most first-time founders in Nepal struggle with:
❌ Finding the right investors.
❌ Structuring a solid business plan.
❌ Learning how to pitch and scale.
We help you navigate these challenges with mentorship from experienced entrepreneurs who have been there.
Want to raise money and grow your startup the right way? Join our startup workshop program and get expert guidance every step of the way.
Your idea deserves a shot. So, what’s stopping you?
