Top 10 Practices to Raise Funds for Startups in India
It is a dream for most people to launch their own business. And it’s a good time for sure to start something cool and innovative.
At present, India offers favorable conditions for entrepreneurs to launch their startup. But before launching your own venture, it would be better for you to proceed strategically. Any startup can’t be successful without solid business policies, predictions, and, last but not least, a proper investor team.
When you are launching a business, please remember to establish one that will always be relevant. This is the most crucial stage for startups. Next, startups would need funds for continuing their venture. There are various kinds of funding strategies that entrepreneurs can utilize.
If you are planning to launch a startup but are worried about raising funds, you need to know the various funding strategies first. Here we will share the ways you can use to gather capital for your startups. Let’s get started:
There are various sources that you can avail of for funding. But you need to select the one which goes with your business type. You also need to consider the risk elements, paying back strategy, and how much you can involve investors in making your business decision.
Here we are offering some sources that can be beneficial for the startups for raising funds.
Self-finance your business
There could be nothing wrong with investing your own savings for your startup. However, self-financing has many risks. But if you have your own savings, it’s easy to start with that when compared to other funding processes. This is due to the investment of self-finance, people try to work harder with more dedication to making their startups successful.
So, whenever you are planning to launch your startups first, you should calculate your savings. Then it would help if you decided how much from your savings you can use for your new venture. While estimating your funds, take care that you have adequate money to fulfill other self and social needs for the coming year.
Withdraw money using your credit cards
If you have credit cards, then you can use them for raising funds for your startups.
Nevertheless, it would be better to withdraw money from the credit cards as per the permitted limit. You might have to pay high interest if you fail to pay back the credit card withdrawal amount. Some banks offer business credit cards. So, entrepreneurs can also apply for business credit cards to raise capital for their new ventures.
Can apply for a business loan from banks
A bank loan is a smart option for those starting new businesses. Sometimes it’s not easy to self-finance the high amount required to create a new business venture. Credit cards, too, have amount limitations. In that case, applying for a bank loan would help the entrepreneurs to launch their small business ventures.
Usually, the bank offers two types of business loans which are term loans and working capital loans. So, you can select the option as per your financial requirement.
Play & win capital raising contests
Currently, there are some organizations that organize fund-raising contests. They ask entrepreneurs to present their business items or strategies and goals to the investors. If investors can be impressed, they can agree to invest in your new business ventures. Therefore, participating in these contests can be beneficial for raising funds.
There is a startups incubator that supports people who want to start new business initiatives. The startups incubator also helps to plan new businesses by offering management training, networking medium-like services.
But all companies don’t offer the same services. So, it would be better for the entrepreneurs to select incubator companies that would be perfect for their business and guide them properly in raising funds.
Startup accelerators are almost like incubator services. The difference is that it is a time-bound service. New companies need new business ideas to convince investors. Business accelerators guide entrepreneurs to plan for innovative ideas.
Accelerators also share a stake of nearly 5 to 25% for new companies.
Angel investment method
In business, angel investors refer to those wealthy investors who willingly invest funds for new business ventures. They need some convertible debt or the same share as owners in exchanging investments.
Although there are not adequate angel investors, the number is growing. They form a network together. Here they share research and detail regarding their investment procedure. The angel investors also support the startups searching for any other help.
Seed capital method
Seed capital is needed at the very initial business phase, where you have only planned to start a business. Usually, entrepreneurs collect seed capital from their friends and acquaintances. However, now there are many companies in India that offer seed capital for new business initiatives.
Venture capital strategy
Venture capital is also given at an early stage of business to the startups with solid business plans with future prospects. Venture capital demands a similar share like owners in exchange for financial help.
Crowdfunding fund-raising method
Another method that startups can use for raising funds is crowdfunding. It is a new fund-raising technique for new companies. In crowdfunding, there are various people who individually invest a tiny amount for new business ventures. Business owners can source crowdfunding in multiple ways; donation-based, reward-based, and equity-based are the most popular sources among them.
Besides, the funding strategies discussed a new process peer-to-peer is becoming famous financial support for new businesses. Here anybody can receive or incest finance without involving any financial organization. There are various P2P sites from which business owners can select according to their needs.