Business compliance keeping you awake?
Cleartax's wide range of compliance services is here for you
Explore Now

5 Tips on Raising Funds

Updated on: Oct 12th, 2021

|

6 min read

social iconssocial iconssocial iconssocial icons

Entrepreneurs come up with ideas to start their business. Starting the company with an idea or product can seem to be exciting. But, growing it can seem like a daunting task. Raising funds for the business or startup is an essential step in establishing it or its growth. It can be frustrating for an entrepreneur for raising funds.

Many entrepreneurs get confused and have no idea whom to approach and where to start fundraising their business. Startups require adequate funding for their growth. Here are five tips on raising funds for business/startups –

Choose Bootstrapping

Bootstrapping means starting a company with personal savings. A bootstrap implies the launch of a business by an entrepreneur with little or no outside cash. In bootstrapping, an entrepreneur decides to start his own business by calling upon his own family and friends for obtaining funds.

An entrepreneur can raise funds by pitching the idea or proof of business concept to trusted family and friends for starting the business. If they are convinced and agree to pool in funds, then an entrepreneur can raise funds internally. An entrepreneur can first consider bootstrap and then try internal crowdfunding.

Build a Business Plan

An entrepreneur needs to develop a solid business plan to obtain the desired funding. The development of a business plan involves how, what, when, where and why aspects of the business functioning. An entrepreneur must prepare a blueprint with the concrete details in place for building his business. It is better to cover every part of the company in the plan.

An entrepreneur must think about the weekly or monthly running of the business needs with factual revenue projection and expenses. Any investor will have an interest and ask about the plans of the company or startup before investing. A proper and concrete business plan will attract investors to invest in it.

Create a Strong Market

Investors invest in companies and startups that are innovative and have the potential to grow. An entrepreneur who launches his product or services in the market has a better chance of obtaining investments. When a product or service or proof of concept is launched in the market, entrepreneurs can test it with prospective clients.

With feedback and improvements from the clients, an entrepreneur can create a good market for the product. Most of the time, investors are interested in investing in products out in the market and credibility. It is better to bootstrap or borrow equity, get the product or proof of concept market access and raise funds for its growth and expansion.

Get your Timing Right

An entrepreneur needs to position his business in the right way to obtain funds and decide when to approach investors. An entrepreneur needs to consider the timing of his company at the time of raising funds. Approaching the investors too late or too early may not yield the expected returns.

Staging the growth of the business is an essential aspect for entrepreneurs. Instead of raising funds at one go, entrepreneurs should stage the funding through a series of multiple rounds for obtaining a better valuation of their business. The entrepreneurs need to consider their options of raising funds and approach the desired investor at the right time.

Go for Angel Investors

Angel investors are usually one time investors. Angel investors are a better option for startups than venture capitalists at the early stages. An entrepreneur needs to present his business in the right pitch for convincing them to invest in it. The right pitch will help in obtaining funds. It is better if the entrepreneur prepares the presentation for the investors himself. He will need to do some research about the angel investors before approaching them for investments.

An entrepreneur needs to approach the investors who will most likely be interested in his business and share the same goals and ideas. Angel investors prefer startups coming from incubators than other startups. An entrepreneur can consider going for business incubation before going for raising funds. Access to business incubation will help the startup develop, grow, and enter the market, attracting investors.

Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice. It should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.

inline CTA
Get an expert at affordable price
For ITR, GST returns, Company Registration, Trademark Registration, GST Registration
CONTENTS

Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use

ISO

ISO 27001

Data Center

SSL

SSL Certified Site

128-bit encryption