Unless you're a marketing-savvy developer with an eye for a niche and a ridiculous list of people that owe you a favour, chances are your startup is spending money. Deciding which route to go down when looking for funding can be confusing, and is obviously a huge decision for any entrepreneur.
We're hosting a debate that focuses on the traditional venture capitalist funding versus the alternatives. VC funding typically comes with a knowledgable and well connected individual/group of individuals that other routes won't inherently offer. Those same people can also provide invaluable buckets-of-cold-water-objectivity on a business and its potential success. That said, those same people can have different intentions, motives and ideologies to the entrepreneur, and a clash of egos can seriously harm a fledgling company's chances.
Many VC's will push hard for an exit, a few might have ethical nonchalance that the entrepreneur disagrees with. They might even fire you (ala Etsy, Groupon and Apple).
Crowd-funding is a much-vaunted alternative, with platforms such as our very own CrowdBNK and Seedrs offering equity-based investment. Indiegogo and Kickstarter have proven themselves to be both great pre-sales tools, as well as appealing for simply altruistic-investment. Renowned VC Fred Wilson goes as far as to estimate the crowd-funding market will eventually grow to $300 billion in the US alone!
But having many 'investors' each with a small vested interested won't help you with networking or recruitment, and certainly won't be able to offer advice or assistance regarding an exit. They also lack the credibility afforded by a known investor - once you have one VC's stamp of approval, the next round(s) of funding will be that much easier.
Another route to consider is private funding. Dell was famously started with less than $1,000. The bank of Mum and Dad that so cruelly cut your credit can be a great source, and extended further to all friends and family.