An entrepreneur always has a question roaming in his mind –͞How do I fund my startup?
There are many options to fund your startup, All India MSME world brings you the most popularly used 10 ways to fund your startup to help to raise capital.
Self-funding ranges from as little as a $1,000 to over $1,000,000. Serial entrepreneurs with proven success and positive cash flow in their existing businesses often see self-funding as the optimal choice
2 . Crowdfunding
On crowdfunding platforms, the entrepreneur will upload a detailed description of the business. Along with the description, he will brief about business goals, strategies to make profit, the amount he requires to raise as funds and reasons for it. When the consumers read about the business on platforms, there is a chance that they may like the idea to give funds. The basic advantage of this type of funding is that the entrepreneur can create an interest in the market of the product alongside financing.
3. Family & friends
The next best option to raise capital for your startup is to involve your family and friends. The immediate way of receiving funds at a cheaper rate as compared to borrowing from others/banks.
4. Business Loan
Banks are checking business plan, projects and valuation of business on that bases they sanction loan to startup. For receiving an easy loan at least one person should have to be on your team who has continuous income source from salary or other sources on bases of that statement startup could get a loan from banks.
5. Angel Investment
The individuals with upcoming startups and with surplus cash are termed as ͞Angel Investors͟. These individuals work in groups of networks to screen the proposals. These investors not only offer to fund but also offer mentoring or advice. The amount invested by Angel Investors is less when it is compared to the VC͛s. They are risk takers and get more return on that.
6. Venture Capital
They are investing in a promising startup or in highly profitable business for getting high rates of return. They provide funding in return expect a high portion of equity. They usually invest in a business against equity and exit when there is an IPO or an acquisition. VCs provide expertise, mentorship and acts as a litmus test of where the organization is going, evaluating the business from the sustainability and scalability point of view.
7. Incubators & Accelerators
Incubators are like a parent to a child, who nurture the business providing shelter tools and training and network to a business. Accelerators so more or less the same thing, but an incubator helps/assists/nurtures a business to walk, while accelerator helps to run/take a giant leap.
8. Government schemes
To help the startups and to improve the startup economy system, Government of India has launched 10,000 Crore Startup Fund in Union budget 2014-15. The government has launched ͚Bank of Ideas and Innovations͛ program to boost innovative products. Government-backed startups with ͚Pradhan Mantri Micro Units Development and Refinance Agency Limited (MUDRA)͛, extend benefits to around 10 lakhs SMEs with an initial corpus of Rs. 20,000 crores. The entrepreneurs need to submit their business plan and once approved, the loan gets sanctioned. They get a MUDRA Card, which is like a credit card, to purchase raw materials, other expenses etc
Along with the government, nowadays most of the colleges and private institutions have launched various competitions for startups. Such competitions encourage the entrepreneurs to set up their own business. The tremendously increase in many contests helped the startups to maximize the opportunities for fundraising. Winning such competitions can help you build a unique product and a huge media coverage. In this event, you must pitch your idea/explain your business plan to convince jury and investors to invest in it.
10. Contra service swapping
In present trend, many startups are exchanging goodwill and services with other entrepreneurs. Acknowledge several service providers such as lawyers, designers, photographers and small-scale vendors who work on a goodwill basis. These people may grow as the loyal paid service providers once your venture grows and you yield profits.
If you want to go fast, then seek for outside money. It might reduce your freedom of taking a decision. While Bootstrapping is a good option for the learner, but you can lose the market opportunity in this process. Chose opportunity wisely and rock the market.
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