VC, Grants, Loans, or Pitch Comps? How to Choose the Right Funding for Your Business
Not all money is the right money
At every Pull Up & Pitch, some version of the same question comes up: “Should I go after VC, or apply for grants?” The honest answer is that it depends on what your business needs the money to do.
Every type of capital comes with tradeoffs. Some cost you ownership. Some cost you interest. Some cost you time spent on applications. Different funding fits different stages of a business, so knowing those tradeoffs helps you go after the right money at the right time.
Here’s a quick breakdown of the five most common options, and when each one makes sense.
1. Angels and venture capital
What it is: Angel investors (individuals investing their own money) and venture capital firms give you money in exchange for a piece of your company. Angels usually come in earlier with smaller checks; VCs write bigger ones as you grow. Both often bring connections and guidance along with the money.
The tradeoff: You give up ownership and some control. VCs are betting on fast, massive growth, so they expect you to scale aggressively and eventually sell or go public.
Best for: Scalable tech, and other businesses built to grow fast and big, like platforms or products that can reach millions of customers quickly.
2. Grants
What it is: Money you don't pay back and don't give up equity for.
The tradeoff: Grants are competitive, and they're usually tied to a specific use. You may need to report back on how you spent it, and applications take real time.
Best for: Equipment, programs, and mission-driven work. If you can clearly show what the money will buy and who it helps, grants are worth the effort.
3. Loans
What it is: Borrowed money from SBA-backed lenders, CDFIs (community development financial institutions), or banks.
The tradeoff: You keep full ownership, but you repay with interest on a set schedule, whether it's a good month or a slow one. CDFIs are often more flexible than traditional banks and are worth a look if you've been turned down before.
Best for: Inventory, a location, and hiring when your revenue is steady enough to cover payments.
4. Pitch competitions
What it is: You pitch your business live to judges, and winners take home cash, usually with no strings attached.
The tradeoff: Checks tend to be smaller, and there's no guarantee you'll win. But even if you don't place, you walk away with practice, feedback, and new people in your corner.
Best for: Early proof and press. A win gives you a credibility signal you can point to in your next grant application or investor conversation. (This is exactly why we host Pull Up & Pitch.)
5. Revenue-based financing
What it is: A lender gives you capital upfront, and you pay it back as a percentage of your monthly revenue until you hit an agreed total.
The tradeoff: You keep ownership, and payments flex with your sales: a slower month means a smaller payment. The total you repay is higher than what you borrowed, so read the terms closely.
Best for: Businesses with steady, predictable online sales, like e-commerce brands and subscription products.
Founder math: why VC can’t be the whole plan
In 2025, startups with a Black founder or co-founder raised about $942 million in venture funding. That’s just 0.32% of all U.S. venture dollars, according to Crunchbase.
That number says more about who gets access than about who’s building great businesses. It’s also a reminder that venture capital is one door, not the only one. Founders who stack grants, pitch wins, loans, and revenue-based financing can build real momentum while VC catches up.
Ask one question before you apply
Before you fill out another application, ask yourself: Will this money help me hire and keep people for the next two years?
Capital is what pays for your first hire and keeps payroll steady when sales dip. If a funding source can’t do that, or comes with terms that make it harder, it may not be the right fit for this stage, no matter how big the check looks.
Keep this handy
Want the cheat sheet version? Download our free Funding Fit Guide and keep it nearby before your next application.
And if you’re ready to put your pitch in front of a live audience, keep an eye out for the next Pull Up & Pitch near you on our events page.