One of the most common roadblocks that new startups run into is funding. This is because let’s face it – ideas, no matter how great they are cannot be materialized unless there is a financial support for the same. However, it can be difficult for budding entrepreneurs to convince lenders and investors to see their vision and bring their products/services to life.
If you are struggling in finding the best funding options for your business, then the following are a few that you can count on:
1. Traditional Lenders
The safest and most straightforward option for funding a business in India is to get a loan from a bank. However, you need to have a good credit score, business plan, proof of concept, and certain documents to get the money. It’s also advised that you read a guide on the various types of business loans that you can get and ones that are suitable for your needs.
2. Venture Capitalists
The concept of venture capital in the business domain is still new in India and other developing nations. This is the reason why awareness is being spread in the country via seminars and camps on venture capital assistance.
Venture capital are special funds that are managed by professionals for investment in emerging companies that show potential. Most venture capitalists invest in businesses against equity and exit when there is acquisition or IPO.
If you are confident in your business and have a solid plan that can convince a VC, then you can expect to get the desired amount of funds easily. However, there is a downside to this option- the VCs like to recover their money as soon as possible. So, unless your business plan promises good growth in just 2-3 years, you can have a hard time getting the funds via this path.
3. Friends and Family
It’s possible for you to arrange most of the money for your startup on your own. For instance, you may have enough savings and money from other investments like gold, real estate, etc. You may have also won tons of money on an online casino like BetWay India which offers popular games like three-card poker, blackjack, slots, etc. At any rate, if you have the money, then you can get the rest of it from family and friends.
No matter how bad the circumstances are, you can always turn to your family and friends for help and support. So, when you have a dream i.e. a new business idea, then you know they can extend the financial aid you seek.
If your business idea is unique or has that “viral” element, then you can raise a lot of money through a crowdfunding campaign which allows the people who are interested in your product to send you money for the same. In return, they are rewarded accordingly, most common option for which is offering the product for free and with early access exclusivity.
The following are some of the best crowdfunding tips that can help you raise a large amount of funds:
- Write a pitch and messaging that’s catchy enough to grab the attention of your investors right away
- Focus on what your investors will get by funding your campaign. If it’s not something that they will take interest in, then you won’t get their money
- Involve your family, friends, co-workers in the campaign so that they start giving you financial support from day one and build a momentum for the rest of the world to pick up
5. Government Loans
The government of India has always showed interest in supporting startups and developing a culture of entrepreneurship in the country. This is the reason why there isa slew of government loans that can be availed by startups today. These include:
- MUDRA Loan Scheme: MUDRA (Micro Units Development and Refinance Agency Ltd.) scheme was launched by the government to provide financial aid to the MSME sector. Under this, small businesses can avail loans up to 10 lakhs at a modest interest rate of 1% per month.
- Coir Udyami Yojana: This scheme funds projects costing up to Rs. 10 lakhs at an interest rate that’s at par with the base rate. However, the total funds are capped at 25% of the project cost.
- Credit Guarantee Scheme (CGS): The government of India joined hands with SIDBI (Small Industries Development Bank of India) to provide unsecured loans up to 100 lakhs to SMEs. You can avail the same by checking the terms and conditions and ensuring that you qualify.
6. Win a Contest
Across the globe, different kinds of contests are organized for startups to provide them the funds and guidance they need to succeed in their respective industries. In India, the following are some of the top competitions that you can consider:
- Microsoft BizSparks
- Lets Ignite
- NASSCOM’s 10000 Startups
- Seedstars World
- Mentor Capital Network
So, these were some of the popular methods for raising capital for a business. Each option is suitable for a particular business-type, and you can identify yours to get your startup up and running in the shortest period of time possible. Good luck!