Your Gambit

Wondering the various options that could be available to fund your startup? Before we get into the topic be aware that you will need to create your Business Plan if you don’t already have one in place, because without a set plan or Idea (Proved on Paper) on how you’re going to grow, make revenue and profits getting the desired funding may be slightly harder. In some cases if you have your product prototype ready and if it is innovative you may be able to slip through the cracks.

Normally the first option available for a startup is to get bootstrapped by its owner/founder. If the owner doesn’t have enough funds they may request their family and Friends for the same, this is an informal way of raising funds but even with Family and Friends in the picture there may be certain costs that would need more financing. So in this case what are the options?

1. Angel Investor
2. Venture Capital
3. Bank Loans
4. Crowd Funding
5. Startup Incubators
6. Government Grants

Let’s discuss each one of these in detail

An Angel Investor is normally a wealthy person of high net worth who provides funding for small startup and entrepreneurs in exchange for ownership equity in the company. An angel investor usually doesn’t expect money back until the idea succeeds because they are normally unconventional investors and they are high risk-takers.

A Venture Capital is similar to a financial institutions which is generally formed with High Net Worth Individuals {HNWI} as Limited Partners. The VC raises money from the HNWIs and then invest in promising startups or even larger funds. To be able to raise money for a VC a startup will need submit a Business plan with Projections.

Bank Loans as pretty straight forward, the startup founder would have to keep something valuable enough as a collateral to take a loan against. Bank loans are normally suggested if there is no urgency for the cash as it take longer to process.

Crowd Funding is a method of collectively raising money through family, friends, customers, individual investors and others. Crowd funding is usually done through social media and is entirely dependent on the collective efforts of a large pool of people. It is different from the traditional method as it normally kept private and only for a select people. There a different types of crowd funding like reward-based, equity based, debt-based, donation-based etc.

Startup Incubators are unique organizations with the sole purpose of supporting a startup grow and innovate by providing various tools, mentorships, office spaces, community networking, funding support and more.

The government understands that for economic growth and innovation in the country it is necessary to focus on the startup ecosystem. Various initiatives and Government funds like “Made in India”, “Startup India Seed Fund Scheme”, “Startup India Initiative”, and more.

The funding journey and convincing people to invest in you and your idea may be tough, long and stressful but everything can be better with a little faith and a lot of patience.