Many a times, businesses with great potential fail due to low funding to their start-ups. This is due to lack of knowledge about the techniques in which start-up funding can be availed in India. We have therefore elaborated the same in written below, which can come of aid to any entrepreneur looking for a funding means for their start-up.
The following topics have been discussed in this article:
- About Start-up Funding in India
- Techniques to Fund Start-ups
About Startup Funding in India
Several start-ups in India, with a huge potential to succeed, end up failing due to lack of finance. No matter how unique or grand your business idea is, it seems quite impossible to execute without proper funding. Although, there is always an option to raise funds from your family members and close friends, that too is not possible every single time. This raises the question of the other options available to Indian entrepreneurs for raising funds to run their businesses smoothly.
In accordance to a survey, every year around 70% people go for a start-up but due to the issues of funds, their business starts to fail. As their dreams start to take wings, funding becomes the inevitable wind beneath those wings. Every entrepreneur looks to answer the question of the ways in which they can fund their start-up.
Techniques to Fund Startups
We have few options by which you can get the funds required to start your small business and run it smoothly.
There are six shot techniques by which you can fund your entire startup to accelerate operations at the scale at which you desire. Although there is no single way for startup funding, you can use multiple ways out of the techniques mentioned below in order to offer working capital for your company:
Bootstrapping, also known as self-funding, is basically a start-up funding technique which entails getting the working capital for the firm from its own pocket. In bootstrapping, the concerned business owner has to get the funds through their savings or even through investments via friends and family. The procedure of raising capitals from friends and family is quite easy as it has lesser compliance’s. There are multiple upsides to raise capital for your firm by the technique of bootstrapping.
Crowdfunding has suddenly emerged to be one of the innovative and newest ways to raise fund for any specific business venture. Crowdfunding is basically a startup funding technique which involves taking a loan in the form of pre-orders, contributions, and investment. This loan covers the manufacturing costs of the products and resource purchasing for the delivery of services after the production stage.
Angel Investors are investors who are kind enough to invest with their money which is surplus and resources so as to help your business venture succeed. These are actually the investors with a vast interest in investing in few of the interesting and innovative projects. Angel investors have assisted to start up multiple prominent companies, including Yahoo, Google, and Alibaba. This alternative form of investing generally occurs in early stages of growth of a business, with investors expecting up to 30% equity.
Venture Capital Investments:
Venture Capital Investment is one of the fundamental routes that multiple companies take for raising operating capital for their startups. Venture Capital is when you really bet your venture against the market. Venture Capital is basically a professionally managed fund which is invested by venture capitalist firms in companies with high growth potential. Venture capital evaluation of a company is said to be a litmus test for the direction the company is going to take. Venture capitalist firms offer expertise, mentor ship, and even assist in evaluating the business from the point of view of sustainability and scalability.
Business Incubators and Accelerator:
Very early stage businesses can consider Incubator and Accelerators as a method for funding their operations and acquiring the resources for production and service delivery. Incubators are essentially business nurturers which provide shelter tools, training, and network to grow the businesses. The business accelerator is a similar prospect to incubators but as the name suggests, it is an accelerated procedure which makes businesses take giant leaps of progression. Generally, an incubator program runs for around 4-8 months.
Raise Funds through Competitions:
A number of technological tournaments are held all across the world for tech start-ups and other startups to prove their worth and excellence in their field by way of competitions. Winning these competitions, which are funded by some of the biggest organizations in the world, could also help the business by assisting it in getting some media coverage for the startup.