I have heard a lot of stories about creative fundraising when it comes to starting a business. Ben Milne of Dwolla raised money for a previous company by selling a bunch of his stuff on ebay. Some use Kickstarter. Recently, however, Mark Suster wrote a great post titled “How This Entrepreneur Raised $28,000 Using Airbnb to Fund Her Startup” about a company called RecycledMedia and the founder Tracy DiNunzio. She sold possessions, did not pay herself and even used Airbnb to rent out her bedroom and couch to cover the bills.
Here is the key point that Mark makes. She is the new prototypical entrepreneur. She started her business based on a personal need, which a recent Kauffman foundation study pointed out leads to a higher rate of success. She did not try to raise a bunch of money. She taught herself SEO to increase her traffic then consulted on SEO on the side to make more money.
When people ask how to raise money to finance a business I sometimes tell them to clean their closets out. I think they believe I am crazy. Here is proof that it works.