Finance your business: loans, venture capital or crowdfunding?

Big bets cost money. How much varies, but if you are planning international expansion, an expanded product range, your own collection or a major tech investment, you likely need to think extra carefully about financing. Here are the most common options, plus what has changed in the funding landscape over the past few years.

Different ways to finance your business

At the base there are four common methods:

• Free up your own capital
• Apply for grants
• Take out a loan
• Bring in investors

Below we cover all of them, plus crowdfunding, which depending on the setup falls into one of those groups.

How to free up your own capital

For smaller investments you may not need more money, you need the incoming money faster. Imagine: you are expanding the assortment and need to buy in for €4,000. You just bought equipment for €2,000 and do not have €4,000 in the account. But you expect to earn it back within a month and really just need to get your own money in sooner.

In situations like that you free up your own capital instead of raising new money:

• Leasing. You rent a thing, machine, fixture, vehicle, for an agreed period instead of buying outright. When the lease ends you can buy it for the residual value.
• Installment payment. You buy something but do not pay the full amount up front. Instead you pay in instalments per agreement.
• Factoring. You sell or borrow against your invoices at a bank or finance company, which advances the money and collects payment.

When can you apply for grants for your business?

There are public grants available depending on which phase you are in and what the money will be used for. Some grants are specifically for product development and innovation or export and establishment. There are also broader growth grants.

Public grants are an exception case though, chances for a regular merchant are relatively small. The general purpose is to stimulate the market where it is not functioning well, often industry-promoting initiatives via projects or grants to companies that collaborate.

For green and sustainable initiatives the grant landscape has become more favorable in recent years, both via national climate investment programs and the EU's European Innovation Council and Horizon Europe programs. If you run an e-commerce business in sustainability, circular economy or energy efficiency, it is worth a thorough survey.

Pros and cons of business loans

Business loans are one of the most common funding forms. The advantage over venture capital: you do not lose ownership and you keep full control of the company.

The downside is interest. And here the landscape has shifted significantly. Central banks raised rates sharply from 0% (2021) to 4-5% (2023-2024) to rein in inflation, making business loans considerably more expensive than during the "cheap money" decade that preceded. In 2026 base rates have normalized somewhat, but lending rates for small businesses are still clearly higher than in the prior decade's lows.

Banks have also become more cautious about lending to growth companies, you typically need:

• Clear collateral or a personal guarantee
• At least 2-3 years of history with stable revenue
• A convincing business plan

Beyond the major banks there are also alternative lenders like Froda, Capcito, iwoca, Funding Circle and Treyd that are more flexible but usually carry higher interest rates. For very small amounts (< €5,000) invoice financing or a revolving credit line may be simpler than a traditional loan.

Worth knowing about angel investors and venture capitalists

Alternative to loans: bring in one or more angel investors (smaller amounts, often hands-on engagement and contacts) or venture capitalists (larger amounts, more professional, more demands for returns). Both give you money in exchange for ownership and the hope of returns.

The downside: you bring in shareholders who may have different opinions than you. But it does not cost you anything upfront and often gives you access to expertise, network and board insights.

The difference in short: angels come in earlier and with less capital. VCs come in later, with bigger amounts and tougher demands on growth and exit.

How to find the right investor in 2026? Preparation is everything, you need a pitch, a deck, financial projections, and ideally also a team. To get the right contacts:

• National investor networks (Connect Sweden, UK Business Angels Association, AngelList US), match founders with investors
• Government VC arms (Almi Invest, British Business Bank, US SBIC programs), often the first VC round
• Industry-specific networks like Founders Alliance and e-commerce park networks
• LinkedIn, surprisingly effective if you have a credible CV and clear pitch

Note: since the 2022 downturn in tech valuations the VC climate is still more cautious than during the "ZIRP era" (zero interest rate policy, 2019-2021). Investors want to see revenue and profit margin, not just growth at any cost.

How crowdfunding can work as a business

Crowdfunding went through a maturation phase since the peak years of 2018-2021. Some major platforms have disappeared or scaled back, while others have continued to grow. The common denominator: money is channeled via a platform, but the setup differs:

Donation-based crowdfunding

People donate money to your business without getting anything back. Common for testing business ideas and seeing what demand exists.

Reward-based crowdfunding

People get a reward in return, product, merchandise or other perk. Kickstarter and Indiegogo are the classic international platforms.

Loan-based crowdfunding (peer-to-peer)

People (and in some cases professional investors) lend your business money in exchange for interest and repayment. Common for B2B projects or larger company investments. Toborrow and Funding Circle are examples.

Equity-based crowdfunding

People invest in your company in exchange for ownership, in practice mini-venture capital. Pepins (Sweden), Seedrs and Crowdcube (UK/EU), and Republic (US) are the main platforms here.

Financing your bets can be a challenge, but you have many paths. And remember: you can combine several methods to reach the total you need. Own capital + a smaller loan + a few angel investors can together build the round you need, without you having to go all-in on a single source.