Raising Capital

9 Extremely Clever Startup Funding Stories

9 Extremely Clever Startup Funding Stories

Flocabulary co-founders Blake Harrison and Alex Rappaport

Image credit: Mike Ricca
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So you think your business idea is dead because you can’t find an investor? Most new entrepreneurs feel the same way.

Through email exchanges with business owners and a few nonprofit founders, I found nine very clever funding stories from founders who made their projects flourish -- renegade style. 

Related: How Six Immigrant Entrepreneurs Transformed Dreams Into Businesses

1. Seek international sponsorship.

When Adam Lyons was launching The Zebra, an Austin company offering a Kayak-type search engine for car insurance, he decided to look overseas to find an outfit that had already successfully developed same business model. He found U.K. billionaire Simon Nixon, who had made a fortune with Moneysupermarket.com.

Lyons offered to become his U.S. partner and Nixon accepted his proposal, Lyons asserts via email.

“Not everyone may think to search for investors in other emerging markets who have experience with similar business models,” Lyons shares via email. “But for us, it was beyond beneficial." 

2. Create a new vision with what you have.

In the early 1970s, EJ Jackson worked as a private investigator but banks rejected his loan application that would have allowed him to expand his business. In a stroke of creative inspiration Jackson took out two car loans: one for a 1975 Lincoln and another for a 1975 Cadillac. In 1977, he used the two cars to launch a new business, Jackson Limo Service.

Today his Los Angeles-based company employs hundreds of drivers, chauffeuring passengers in that celebrity-studded town. “Sometimes you have to take what you can get and make something out of that,” Jackson shares via email. “Create a new legacy for yourself.” 

Related: Want to Get Money From Mark Cuban? Here's How.

3. Advertisers are investors, too.

Darin Alpert was the first person to join the team of Find Me Gluten Free,  a company, also in Austin, offering a search engine to locate gluten-free restaurants. Alpert and his team secured Mark Cuban’s Naked Pizza as an advertiser and then convinced him to become an investor.

“Both deals were done via numerous emails and one 20 minute phone call," Alpert writes. "We grew to 2,000,000 users and profitably sold the company in July 2013.” 

4. Make payment arrangements at the playground.

Abbie Schiller and Samantha Kurtzman-Counter set out to create a children's media company. While their children amused themselves on the playground, they asked other parents for feedback as they developed their product.

Their informal polls struck a chord with parents who then became investors in Los Angeles-based The Mother Company, which offers a series of books and shows for children. The Mother Company wound up raising some $500,000 in funds as a result of playground playdates, Schiller asserts via email.

5. Kickstart yourself.

Priska Diaz naively thought it would be easy to use Kickstarter to raise $75,000 to produce her invention, a baby bottle called Bare that offers air-free milk. But her project failed to receive funds in three months. 

Three years later she was ready to try again. This time she created a website showing the concept with pictures of bottle prototypes. The concept earned her an extensive social-media following as potential customers awaited the product's development.

She set up a system for preordering and hosted a presale directly from a website, raising more than $50,000 for her company Bittylab, she claims in an email. 

6. Share your passion on Facebook.

Bill Gandy's hobby is sharing historic photos of Allegheny City, a community on the north side of Pittsburgh, and he also belongs to a Facebook group Born & Raised on Northside of Pgh

Members of his Facebook group appreciated the reminders of Allegheny City in its glory days. When he suggested opening a gallery to showcase the photos, the Pittsburgh City Council President Darlene Harris messaged him and offered to partner with him. Thus he launced the nonprofit Allengeny City Historic Gallery. Among the initial events planned for fter it opens? A book signing by Steelers owner Dan Rooney. Gandy has raised more than $12,000 in funds for the gallery in less than a month, he shares via email.

Related: How These Entrepreneurs Found a Catchy Way to Teach Students Financial Literacy

7. Think of every party as a pitch fest.

During a going-away party at a bar, Alex Rappaport began telling strangers about his idea to make educational hip-hop songs. Most people smiled politely and moved on.

But a Columbia Business School MBA student was interested and helped Rappaport put together a pitch for its Outrageous Business Plan competition. The Flocabulary business model was a winner in the social value category, earning $5,000 and the attention of a range of investors. 

That's how the Rappaport and Blake Harrison came to co-found Flocabulary, an education startup based in Brooklyn. Today, its online learning program is used in more than 20,000 schools around the world, Rappaport claims by email.

8. Fund my business. It's my birthday.

In 2008, as Cynthia Kersey neared 50, she found her life changing dramatically as she went through a divorce. Instead of wallowing in heartbreak, she tackled her dream idea, securing a child's right to an education. She invited everyone she knew to her 50th-birthday celebration and asked each guest to bring, in lieu of gifts, $100. 

Kersey announced to the partygoers that she would use the gifts as seed money to open her Los Angeles nonprofit, The Unstoppable Foundation. Because of her efforts, 6,000 children have attended school and more than 50 schoolhouses have been built, she estimates in an email.

9. Find the money in the streets. 

While Frederick Hutson served a four-year sentence for marijuana trafficking, his family experienced firsthand the difficulty of staying in contact with someone behind bars.

Upon his release, Hutson informed his family and friends that he would create Las Vegas-based Pigeonly to help keep inmates connected with their loved ones. He went to his street friends to raise the seed capital, collecting money in increments of $200 and $500 and ultimately raising $80,000, he claims via email. Today Pigeonly has grown to employ 13 people.

Related: Go Fund Yourself