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How to get funds for startups in India

Author of this Article is Eshita Goel

Eshita Goel Author Startup Scratch

 

FUNDS!!

Tech Cocktail's DC Mixer & Startup Showcase | 09.19.13

The most important QUESTION MARK for startups.

New businesses are one of the most challenging groups to finance.

Funding Panel Startup Mixology Conference

Angel Investors and Venture capitalists are mostly interested in companies that can grab market quickly and generate a big payoff with an IPO (Initial Public Offering), purchase, or other similar exit. Investors are looking for startups that will be very successful. Even the banks around the corner may have rejected your loan application.

 

You must be tired of listening some of the common answers from the investors for investing in your startup.  Here is the list of the possible excuses:

bit.ly has raised $2 in venture funding

  • We don’t see this as a fit at this time
  • We are hesitant to invest as the lead, but keep us informed if you get a lead term sheet.
  • I’m unsure on this one. Let me set you up with one of our associates who has more

expertise in this area.

  • We see this being competitive to one of our portfolio companies.
  • We would be more interested if you would have included in your product.
  • We are unsure of your business model and will need to see more proof points before we feel comfortable.
  • Your market isn’t big enough.
  • We don’t like the capital structure of the company.
  • We tend to invest locally, and you are located too far away.

 

There are sure to be bumps in the road when pursuing the dream of starting your own business. Often times, when business owners apply for funding through a traditional bank they are outright rejected or offered too small of a loan amount.

 

If this is has happened to you, you’re probably asking,

 

“What do I do now that a everyone has rejected my loan application

to fund my business?”

 

ESB - Spark of Genius 2015 17/09/15

 

Well let me tell you ‘where there is will, there is a way’.

 

Do you know SKYPE – (An application that provides video chat and voice call services. Users may exchange such digital documents as images, text, video and any others) was rejected 40 times before getting funded and giving on to a massive exit.

So, When traditional business funding options are not meeting your needs, don’t worry. Alternative business finance can be your business’s saving grace. Let us have a look at them.

Crowd

Funding

Family & Friends

Personal Credit Cards

Online

Vendors

 

BUSINESS FINANCE METHODS

Business Credit Cards

Vendor

Financing

Bootstrapping

 

 

 

Funding

  1. CROWD FUNDING

The practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet is called Crowd Funding. It

is a relatively new way startups access capital.

The crowd funding model is based on three types of actors:

  1. a. The project initiator who proposes the idea and/or project to be funded
  2. b. Individuals or groups who support the idea, and
  3. c. A moderating organization that brings the parties together to launch the idea.

 

DEMO-Founder-School-Startup-01753

 

Depending  on  the  type  of  business  you’re  starting,  how  far  along  you  are  in developing your product, and your ability to “sell” your idea on one of the many crowd funding platforms, it could be a good way for you to fund your small business.

 

  1. FRIENDS AND FAMILY

Although friends and family isn’t the most popular place to look for funding, it’s still

a viable option and where the vast majority of small business owners find capital. In

fact the success rate is better than grants, crowd funding, credit cards, and other types of online and offline small business lending.

ESB - Spark of Genius 2015 17/09/15

  1. PERSONAL CREDIT CARDS

A lot of business owners leverage their personal credit cards to access capital for their business. But using a personal credit card over a business credit card is not a better

option. Because credit card companies report to the credit bureaus at the time they invoice you, even if you pay them off immediately. Most credit card companies

report on your personal credit report—potentially lowering your personal credit score.

DEMO-Founder-School-Startup-01757

  1. BUSINESS CREDIT CARDS

Before you use a business credit card for business, it’s important to make sure you

report to the business credit bureaus. This will allow you to better manage your personal credit score in addition to you business credit score. It might even help you improve your personal score.

 

  1. BOOTSTRAPPING

Most common way to fund your startups is bootstrapping. It means starting a business

without external help or capital. Such startups fund the development of their company through internal cash flow and are cautious with their expenses. Generally at the start of a venture, a small amount of money will be set aside for the bootstrap process.

London Web Summit 2012

  1. VENDOR FINANCING

Vendor finance is a form of lending in which a company lends money to be used by

the borrower to buy the vendor’s products or property. Vendor finance is usually in the form of deferred loans from, or shares subscribed by, the vendor. The vendor often takes shares in the borrowing company. . Although a vendor probably won’t offer capital to help you start your business, they may offer special terms to give you a little way.

 

  1. ONLINE LENDERS

There are also a lot of options available online for small business owners with at least

a year in business. Online lenders don’t hold you to the same rigid credit criteria as traditional bank might, but you’ll need to have some business history to find success with this type of financing.

Comments

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4 thoughts on “How to get funds for startups in India

  1. Good effort made the author by guiding different source to generate funds to start business.keep it up.

  2. A good piece of info on how one can start by multiple funding. Interesting for them who think only big capital investment can give a start to their business.

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