Many entrepreneurs usually begin with high hopes and investor confidence. However, a few circumstances can either help or mar the growth of any business startup. According to many market research companies, funding is one of the reasons due to which a company stops operating. Without adequate finance, business startups tend to crumble, and this malignant obstacle often causes infant business startup owners to seek financial backing for their startups. And there are different funding options that you can adopt, in order to source the required funding for your startup.
Here are the 8 different funding options for an entrepreneur to fund their startup business in India
1.) Bootstrapping: It is one of the most viable options for an entrepreneur to keep running their startup. It allows you to have total control of your business. Since there is no-one else in the process, you enjoy the liberty of decision making. Though, you may miss out the valuable guidance and mentorship from angel investors and venture capitalists.
2.) Incubators and Accelerators: This option is mostly useful for startups who are in their early stage. Founders get help to quickly grow their business and they often better their chances of attracting a top venture capital (VC) firm to invest in their startup at a later stage. Though, both the programs are different from each other.
3.) Start-up Contest: There are several ongoing startup contests one can participate in to get funding and other needed help. But, this option is widely accessible to early-stage startups.
4.) Government funding programs: In order to empower Indian startups, the Indian government, under the leadership of Prime Minister Modi, has done tremendous work. Whether it’s funding support, tax rebates, mentorship or guiding platforms like Startup India Hub, startups are being provided tiered support. Also, there are many schemes and startup funds have been introduced by the government under the Startup India plan. These government schemes for startups operate from tech-specific verticals to agritech, greentech, science and academic innovation and many more. One can seek funding support under these schemes if they fulfill the criteria.
5.) Crowdfunding: If you have a great business idea but due to a funding issue you are unable to start then this funding option may be helpful. With help of crowdfunding platform, you can raise small amounts of capital from a large number of people. However, the process requires time and dedication before you may see the results.
6.) Angel Investment: This financing option can be helpful to those who are seeking funding along with valuable advice from wealthy individuals also known as Angel investors. They will provide funding in exchange for a share of equity in the business. Some investors work in groups and screen deals together before providing funds, while most work on their own.
7.) Venture Capital: A Venture capital fund is another option for small, early-stage, emerging startups that are deemed to have high growth potential, or which have demonstrated high growth. VCs put their required money in exchange for equity in the business, and get returns when the business goes public or is acquired by another company.
Besides, Venture capitalists offer expertise and mentorship which help a startup to grow to the next stage. But you may be forced to give up a large stake in your business due to the significant amount of funding provided.
8.) Working Capital Loan from Bank and NBFC partners: Getting the working capital loan from the banking institution was a tedious task for any business owner in the past. However, the current scenario has changed. At present, you have multiple options as NBFC partners entered into this sector. You can get the working capital loan easily, and the interest rates have been also reduced.
But before you apply, you should know the different aspects of the working capital loan; otherwise, you might end up choosing a deal that will eventually hurt your business. The money has to be paid back whether the business succeeds or not, failing which may lead to loss of your assets if any.
Summing it up
All of us know that finance is the backbone of every business. You may lose out on many opportunities due to lack of funding. But, there is nothing to worry about. Today, you have many funding options for your startup, no matter what your company size or credit score is. So, just go ahead and grab the opportunity!