Where to get startup cash now

Bank credit is scarce and investors are skittish, but that didn't stop these 6 startups. They found creative ways to raise cash during the downturn.

1 of 6
BACKNEXT
AirBnB
AirBnB
AirBnB cofounders Brian Chesky, Joe Gebbia and Nathan Blecharczyk

San Francisco
Funding:
Cereal sales; Y Combinator incubator
Amount raised: $30,000 from cereal; $20,000 from Y Combinator
Launched: August 2008

When AirBnB's founders first thought to build a Web site to help travelers to rent rooms in other people's homes, angel investors were intrigued but too wary to sink money into the fledging project, says CEO Brian Chesky.

So he and his cofounders lived off their savings and maxed out their credit cards until October 2008, when they realized that one of their ideas -- to create a fun breakfast cereal hosts could provide guests -- could be monetized in a big way. Taking advantage of the election year, they purchased huge quantities of bulk cereal, then pasted together cardboard boxes they'd paid an artist to brand as Obama O's and Cap'n McCain cereal. In two months, the entrepreneurs sold 800 boxes of cereal at $40 a pop, for a profit of more than $30,000.

Months later, the AirbnB team was accepted by the Y Combinator incubator, which gave them three months of support and training and an additional $20,000 to fly to New York -- their biggest market at the time -- to meet users, throw launch parties and promote the site. By the time they exited the incubator and presented their project to investors, AirBnB was profitable. In return, Y Combinator took an equity stake in the company. AirBnB's founders won't say exactly how much they gave up, but Y Combinator's typical deals involve a 2% to 10% stake.

Today, AirBnB has listings in more than 2,680 cities and 116 countries. Including its three founders, the site has nine employees and is "aggressively hiring," Chesky says.

By Tina Peng, contributing writer

NEXT: Makerbeam
Email | Print | Share  |  RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
LAST UPDATE: Mar 24 2010 | 5:16 PM ET
More Galleries
5 startups that are reimagining the world Bricks that grow from microorganisms, household garbage turned into art, three-wheeled bike-cars -- these startups are redefining urban living. More
Blue collar entrepreneurs These five entrepreneurs took their blue collar experience and used it to launch innovative businesses. More
7 lifehacks to eliminate your holiday hassle Whether curating the perfect gift or finding a pet-sitter, these startups offer time-saving services that might just seem like holiday magic. More
Sponsors

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.