As the whole world seems abuzz with the word ‘startup’, the popular concept today has gained a hallmark prominence across nations. The total number of startups is rising in developed economies and emerging markets alike. So it is safe to say that this bandwagon is set to become the alpha of industries.
Talking of economies, India is not new to the startup concept and infact, it has been totally deluged by the trend in the past few years. The last decade has witnessed some major startups disrupting the conventional corporate scene in India.
There’s no denying ‘startup’ the idea, is a million dollar baby, but can’t say it is as easy for every startup to survive in the big sea. In India, almost every fortnight when a new startup gears up to begin operations, another one bites the dust. Ever wondered what compels some startups to take a such colossal step? Funding! Mostly.
Launching a startup is definitely something to take pride in. It is an absolute advantage if your creation is innovative and self-motivated, but when it is ready to take off you have to see that it is satisfactorily funded.
Startup funding can actually be a herculean task, especially in the beginning when your venture may need funding for more than a couple of rounds. Unless you consistently make profits for a good six to seven months, it’s hard to deal with payoffs, operations and other utilities without having sufficient cash flow. This is when funding helps you in operating smoothly and successfully.
Startup Funding: 7 Ways to fund-start your venture
|Angel Investors||Venture capitalists||Business incubators||Friends and family
|Crowdfunding||SME lending||Government Grants||
1. Angel investors
At the very nascent stage of your startup, the first on your to-do list is looking for angel investors. These investors are the first few people who will listen to your pitch. On foreseeing a promising association, they will also invest in the idea. Angel investors do not invest a very big amount but they also don’t get into the technicalities of the venture.
2. Venture capitalists
As the name suggests, venture capitalists are investors who lend money only upon liking a business model and after contemplating prospects. Usually, venture capitalists invest in a lump sum and are known for expecting high returns.
3. Business incubators
As you know every industry today has programmes called business incubators to assist startups with proper financing and training. when they are merely starting out. The programmes consist of industry experts serving as mentors-cum-investors to help entrepreneurs understand the current growth trends.
4. Friends and family
What could be better than your own family or friends investing money in your idea. This, in fact, is said to be one of the safest and the most reliable ways of all the other fundings as the one lending you the money knows you enough to put their trust in you. Besides, you always have them by your side.
A very popular type of fundraising, crowdfunding is opted by a number of startups today. Certain websites are dedicated to collecting investments from a host of investors just so they can help budding startups in setting up their business.
6. SME lending
There are millions of micro-financing firms offering both secured and unsecured working capital loans. The only disadvantage is that they come with higher interest rates.
This type of funding typically applies to businesses operating in the research and development process. Grants are offered to them by the government because most of these startups are run and regulated by the government itself
All that being said, every entrepreneur should envisage the pros and cons of their idea before they lay it on the ground. A good funding will help a startup go a long way without losing balance.