Funding for Startups

According to a study, around 94% of new businesses get stalled due to low funding. Money plays the vital role in building infrastructure, gaining resources and acquiring employees. For a revenue-generating business, one has to put efforts in building capital. That’s why every entrepreneur thinks about the finance related issues first.

The requirements of funding and finance entirely depend on the nature of the business. Depending on the type of business, entrepreneurs have to select the any one of the alternatives for financing purpose. Here are some ways which can be used to raise funds for Startups in India.

Self-funding for the business

Self-funding, or bootstrapping is the best and efficient way of financing the startup business. This one is more important because nobody like to invest in a pre-mature business as the succession plan is not clear of such type of business. Moreover, money from family and friends are reliable with the interest rates. But, bootstrapping can be the best idea only for small investment in a project. There are startups which require large funding from the Day 1 of the business. For such type of business, this is not be going to be a good idea.

• Crowdfunding  option :

This way is completely new. It is likely to take loans, pre-order or investment from more than one person at the same time.For this, the entrepreneur prepares the complete description regarding the business including funds, plan, project goals, profit stats, etc so as to make the consumer and investor read about the business to find it trustworthy and authentic. They get funding for the company by pre-booking of services, or by giving loan or donations. The best part of crowdfunding is that it raises the audiences along with funding as a proper advertisement of business is done making people know about it.Indiegogo, ketto, catapooolt, etc are some well-known crowdfunding sites for India.

• Getting venture capital :

Venture capitals are professionally reliable funds, who invest in companies having successful plans and is of great potential. They exit out with these investments in case if IPO or an acquisition. Helion ventures, Blume ventures Accel partners, Sequoia capital, etc are famous ventures in India.

• Funding from Incubators and Accelerators :

It is ideal for all stages of business for funding. Incubators act as a guardian to the startups, which nurture the business by providing all the necessary and fundamental tools. Accelerators are also similar to incubators. Amity Innovation Incubators, CILE, AngPrime, etc are some of these types.

• Bank Loans :

The bank provides two types of financial loans for business i.e., capital and funding. Almost every bank in India offers finance through various programs. Bank of Baroda, HDFC, ICICI, and other banks render various offers in providing working capital loans. So, overall, India is growing very rapidly in the field of startups. However, most of the big companies has acquired the small startups for increasing their scale by the name of integration. They also dumped those small companies afterward as they didn’t found them useful. For instances, Ola acquired Taxi for sure and then ditched that company. Snapdeal also did the same with Exclusively .in. There are companies like Pepper Top, Fashionara, Limeroad, Policy Bazaar, Big Basket, First Cry, etc who have reached the peak as a startup and gained popularity.