Recently, a study was conducted by some renowned universities, which stated that nowadays, around 94% of the businesses fail in their first year itself due to lack of funding. However, it shall be noted that an entrepreneur with futuristic approach and careful planning will able to survive in the prevailing dynamic and competitive market conditions as well.
By this blog, we will be providing a comprehensive and detailed guide regarding the ways you can get funding for your start-up. Some of these alternatives are available for Indian Business, however, some are available for foreign countries.
Bootstrap the Start-up Business
Bootstrapping or Self-funding is a both effective and efficient mode of commencing a start-up, specially when a business is in its initial stage. It shall be noted that the first-time entrepreneurs often face trouble in acquiring funds as they do not have any previous point of attraction or any plan of future success.
So, in the initial days, it is often suggested that one should raise funds from his/ her and family savings. Also, the same will involve less and complexities and formalities that, too, with low interest rate charged.
Fund through Crowdfunding
One of the most recently evolved methods of raising capital for a start-up is Crowdfunding. The term Crowdfunding is like acquiring a loan, investment, or contribution from more than one source at the same time.
The working of Crowdfunding can be explained in a manner that in this mode an entrepreneur needs to comprehensively explain his/ her business on the crowdfunding platform. Also, he/ she requires to mention about the future plans, goals, objectives, and the amount required for raising funds. If the prospective customer like the idea of business, then, in that case, he/ she will give an amount for the company.
Contact Angel Investor for Funding
The term Angel Investor means an individual who is having surplus cash and a keen interest to invest in start-ups. Further, it shall be noted that angel investors collectively work as a group to screen the start-up proposal before investing. Therefore, Angel Investors can be regarded as the alternative mechanism for raising capital in the early growth stages of the company.
Arrange Venture Capital for Business
The term Venture Capitals denotes a professionally managed funds, which are invested in the company with huge potential. Further, venture capitalists usually invest against the equity of the business, and exits in the scenario of IPO and Acquisition. Small Businesses are the most suitable business structure for a Venture Capitalist to invest in other than start-ups as they are an already generating revenues.
Get Funding from Business Accelerators and Incubators
Early-stage businesses and start-ups can consider the method of Incubator and Accelerator programs for getting funding. These are found in almost every metropolitan and major city, and can easily assist around of hundreds of start-up businesses every year.
Further, Funding for New Start-up programs normally run for a period of 4 to 8 months, and require a specific time commitment from each business owner. Also, one will be able to make good connections with investors, mentors, and other fellow start-ups for using this platform.
Raise Capital by Winning Contests
An upsurge in the number of contests these days has greatly helped the start-ups and small businesses in maximizing the opportunities for raising fund. Also, it encourages the budding entrepreneurs with business ideas to establish their own businesses. In such contests and competitions, one either have to create a product or draft a business plan. Also, by winning these competitions one can easily get some media coverage for his/ her business.
Acquire Bank Loan
Normally, bank is the first place that an entrepreneur goes whenever he/ she is thinking about funding or raising capital.
Further, a bank offers two types of financing for businesses and start-ups. One is the working capital loan and the other is funding.
The term Working Capital loan denotes a loan that is needed to run one complete process of revenue generating operations. The limit for the same is usually decided by hypothecating debtors and stocks.
Furthermore, the process of raising fund from bank will involve the usual cycle of sharing the comprehensive business plan and the valuation details, together with the project report, made on which a loan is sanctioned.
Obtain Loan from NBFCs or Microfinance Companies
Microfinance is principally an access of financial services to specifically those who will not have the access to the conventional banking services. Also, it is increasingly becoming one of the popular choices for those whose necessities are limited & credit ratings are not favoured by bank.
Correspondingly, NBFCs stands for the Non-Banking Financial Companies that offer Banking services without the compliance of legal requirements /definition of a bank.
In a nutshell it can be concluded that if an individual wants to grow his/ her start-up really fast, then, in that case, he/ she probably needs outside sources for raising capital. However, the plethora of lending and borrowing options may make it easier and simple than ever to get a business started, but it is suggested that a responsible business owner must ask himself/ herself, as to how much financial assistance he/ she really require.
You can also check out : 10 Profitable Business Ideas You Can Start in India with Low Budget