Best ways for funding of a start-up
According to Start-up India (Govt. Of India ) Funding’ refers to the money required to start and run a business. It is a financial investment in a company for product development, manufacturing, expansion, sales and marketing, office spaces, and inventory.
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| Best ways for funding |
Many startups choose to not raise funding from third parties and are funded by their founders only (to prevent debts and dilution Of equity shares). However, most startups do raise funding, especially as they grow larger and scale their operations.
The very first thing i want you to know before starting with other ways is that The Government Of India do provides funding for startups ,such as "The Start-up india Seed Fund Scheme" and a lot more Schemes. So you can check it out on their official website : start-up India
So ,he we're listing all those ways,from which a start-up can get funded :
1. Boot Strapping : Boot strapping in business means starting a business without external help or capital. It is commonly known as self financing. It is considered as the first funding option because by using personal savings and resources, entrepreneur is tied to his business.
It’s risky because you won’t have any money to fall back on if your business is unsuccessful.
Moreover, investors consider it as a merit at a later stage.
- First of all, you won’t have to give up any equity in your company.
- You get to keep all the profits instead of sharing them with investors.
- You also won’t have to pay any interest on a line of credit or bank loan.
However, it is a good option of funding only if the initial requirement is small and handy.
2. Crowdfunding : It is the practice of funding a project by raising money from a large number of people for a common goal. Organisations reach out to common people for funding The emergence of platforms that promote crowdfunding is fairly recent to India. These platforms help start ups or small businesses to meet their funding requirements.
3. Angel Investment : Angel investors are individuals with surplus cash who have keen interest to invest in upcoming start-ups. They also offer mentoring or advice alongside capital.
4. Venture Capital : There are professionally managed funds which are invested in companies that have huge potential. Venture capitalists provide expertise, mentorship and evaluate business from sustainability and scalability point of view.
If you decide to take this route, be prepared to give away a portion of your business.
5. Business Incubators and Accelerators : Early stage business can consider incubator and accelerator programmes as a funding option. These programmes assist hundreds of start-up businesses every year.
These two are generally used interchangeably. However, incubator is like a parent who nurtures the business (child), whereas, accelerator helps to run or take a giant leap in business Incubators and accelerators connect the start-ups with mentors,investors and fellow start-ups using this platform)
6. Micro Finance and NFBCs: Micro finance is basically access to financial services to those who either do not have access to conventional banking services or have not qualified for a bank loan Similarly, NBFCs (Non Banking Financial Corporation) provides banking services without meeting legal requirements of a bank.
7. Friends and Family : You can take money from your friends or relatives to fund your start-up.
The major benefit of this source of investment is that there is an inherent level of trust between the entrepreneurs and the investors.
There are lot more ways, which we'll discuss later on in any such post.
Thank you for giving your valuable time to us.
Happy Learning
Team,The Successlogy
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