Alternative Funding For Startups

Capital is not neutral. It is formative.

Every dollar we deploy touches someone, whether an employee, a neighborhood, or a family's ability to build a life. So the question we ask at Access Ventures is not only who has capital, but whether the systems that move it actually cultivate human flourishing: the ability of every person to live a good, meaningful, and connected life. Funding is one of those systems. And right now, it is drifting away from the people who most need it to work.

More Founders, Narrower Capital

The good news first. Entrepreneurship in America is broadening in exactly the way a flourishing economy should. New business applications are running more than 40% above any point since before the Great Recession, and the people starting those businesses look less like the founder of the last generation and more like the country itself. In 2024, women launched nearly half of all new businesses which is up 69% since 2019, and the number of women-owned firms has climbed to roughly 14.5 million. Since 2019, businesses started by Black, Latino, and AAPI entrepreneurs are up 67%, 25%, and 17% respectively.

Now the harder news. As the founder has thankfully begun to diversify, capital has concentrated. U.S. venture activity reached roughly $250 billion in 2025, with about 63% of it flowing into AI which is a share that stood near 10% a decade ago. Two companies, OpenAI and Anthropic, absorbed 14% of all global venture investment in a single year which is more than most national ecosystems combined.

Unfortunately, geography tells the same story: North America now commands nearly 70% of global VC, up from 48% just two years earlier!

The people building the new economy are not the people the dominant funding model was built to serve. Consider gender alone. While the number of women-owned businesses has grown considerably, companies with all-women founding teams received just about 1% of venture dollars, which is a share that has been falling, not rising and despite the fact that women-founded companies generate 78 cents of revenue per dollar invested, versus 31 cents for male-founded ones.

This is not a story about talent. It is a story about structure.

Why Venture Capital is a Poor Proxy for Flourishing

None of this makes venture capital wrong. For a narrow band of high-growth, winner-take-most companies, it is the right tool. The problem is that we have made a specialized instrument into the default aspiration, the “once-in-a-lifetime” savior funding when it is structurally least likely to reach rural, poor, and minority America, and least suited to the businesses most of those founders are actually building.

Venture capital optimizes for a particular shape of company: illiquid, hyper-scalable, built to exit. Founders who came of age in a downturn, who carry family obligations, or who lack generational wealth are less likely to build that shape and more likely to be filtered out by the "who you know" networks that still gate most deals. And the model concentrates ownership rather than widening it. That matters, because flourishing depends on holding two things together that our systems tend to separate: access to the conditions of a good life, and agency to participate meaningfully within them.

Opportunity and autonomy.

Security and freedom.

A funding model that offers access to cash while stripping away ownership and control gives with one hand and takes with the other. And flourishing, as we understand it, is never a zero-sum prize to be concentrated. It expands as it is extended. The most important entrepreneurs in the country are not building unicorns; they are building the 33.3 million small businesses that make up 99.9% of U.S. firms and employ nearly half the private-sector workforce.

If capital is going to serve flourishing, it has to serve them…and it has to serve ownership, not just growth.

For small, local businesses, the best options are often the well-worn ones, but for founders with the ambition to scale, whose first instinct is venture capital, better alternatives have matured. Three stand out and not because they maximize returns, but because they widen who gets to own, build, and belong.

Revenue-Based Financing: Patient Capital that Keeps Ownership HOME

Revenue-based financing (RBF) is one of the most proven alternatives to equity. Investors provide capital in exchange for a fixed share of ongoing revenue until the funding is repaid along with a modest return multiple; an option to convert to equity sometimes follows. The market has moved from the margins to the mainstream, nearly doubling from $5.8 billion in 2024 to an estimated $9.8 billion in 2025.

RBF fits the grain of flourishing in three ways. First, it is patient and responsive because repayments flex with the health of the business, breathing with slow seasons rather than punishing them. Second, and most important, it lets founders keep full ownership of what they build, preserving the agency to steer toward the long term or toward broader ownership structures down the road. Third, it does not import the lopsided power dynamics that equity so often creates. Because the investor's return is tied to revenue rather than to a sale, the relationship becomes collaborative rather than extractive and a partnership in the health of the enterprise instead of a bet on its exit.

Employee Ownership: Dignity that Precedes Productivity

If flourishing is communal, then ownership should be too. Employee ownership blurs the old line between "funding" and "owning," and it puts capital to work building wealth for the people who create it.

The established path is the Employee Stock Ownership Plan (ESOP) which is an IRS-recognized retirement structure that distributes company ownership to employees through stock. There are now roughly 6,600 ESOPs covering 15.1 million participants and holding more than $2.1 trillion in assets, about 8% of the private-sector workforce. New Belgium Brewing remains the archetype: employee ownership shaped not just the cap table but the culture with open-book management, real access to financial information, promotion from within. As Paul Hudnut of the New Belgium Family Fund put it, "Employee ownership was an important part of how the company was managed and how the culture was built." ESOPs also carry meaningful tax advantages that improve cash flow, and employee-owned firms show lower default rates and greater resilience than their private-equity-owned peers.

A newer path is gaining ground: the Employee Ownership Trust (EOT). Rather than distributing shares, an EOT holds the company in trust for employees on a long-term or permanent basis, sharing profits with them as beneficiaries. It is simpler and far cheaper to establish than a leveraged ESOP - roughly $30,000 to $100,000 versus $150,000 to $300,000 and it is designed to preserve a company's mission across generations. Already the leading form of employee ownership in the UK, the EOT is emerging quickly in the U.S.: in late 2025, Consumer Direct Care announced an EOT on track to cover up to 60,000 employees.

Community and Place-Based Capital: Funding Where Life Takes Shape

Flourishing happens somewhere and that is in a place, among neighbors. Community Development Financial Institutions (CDFIs) are lenders built for exactly that: fair, responsible financing for the rural, urban, and Native communities that mainstream finance routinely overlooks. They are also one of the fastest-growing corners of finance. From 2018 to 2023, CDFI assets tripled to more than $450 billion, and there are now over 1,400 certified CDFIs nationwide.

What makes CDFIs a flourishing-oriented tool is not only who they reach but how their capital behaves. When capital circulates locally rather than flowing out to distant shareholders, neighborhoods build resilience that outlasts any single investment cycle. CDFI lending seeds not just businesses but the surrounding conditions of a good life, things like homeownership, living-wage jobs, grocery stores, schools, and clinics. It is capital that stays close to the people and places it serves, funding with a community rather than extracting from it.

Consciously Constructed

There are more founders than ever, from more backgrounds than ever. Whether their businesses get off the ground (and who owns them when they do) depends on choices about capital that are ours to make.

Static portfolios preserve wealth in moments of contraction. Consciously constructed ones recognize that patient, catalytic capital is often most necessary precisely when the familiar money pulls back and concentrates. Revenue-based financing, employee ownership, and community capital are not consolation prizes for founders who can't raise a Series A. They are the leading edge of a different question: not, "how much return can this dollar earn?" but "how does this capital help more people build, contribute, and belong?"

A flourishing economy is dynamic, resilient, and equitable. But it does not build itself. It is consciously constructed through how we fund, who we let own, and how we make capital move.

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Community flourishes when capital, people, and institutions move together.

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