15 Ways to get Start-up Funding
state Startups are in-thing is like repeating a stereotype. The last decade or
so of booming startups or startups mushrooming (depending on which side you
are) has become one of the hot topics-on and off the Internet. At the last
count, 7,200 startups had been found in India alone, according to the National Association
of Software and Services Companies (NASSCOM), India's largest non-profit trade
group for IT and company outsourcing.
In a manner, this era, which has given rise to young billionaires and tech wizards, has once and for all rewrote the market mosaic. The idea of start-up funding – a relatively modern form of funding business ventures – has arisen with this phenomenon.
While more and more technopreneurs and technology czars set off cozy jobs to start their own company and bring their inventions to life, the big F – Funding – is everyone's big issue. Although ideas are generally more fluid and oozing more profusely, it appears that monetary support for these (ad)ventures are comparatively far and few. Or it seems to be at the beginning. But a closer look at the whole scenario could present a heartening picture. According to NASSCOM, start-ups in India reported a 108 percent increase in overall funding from $2 billion in 2017 to $4.2 billion in 2018.
Having said that, it would be worth presenting only the rosy side of the entire start-up funding issue. For every popular startup, at least a dozen people have not been able to make the cut. Even seemingly eye-catching ideas and start-ups end up at opposite ends of the spectrum of performance.
The causes may be numerous, but prominent among them is a lack of understanding about tackling the exciting yet equally daunting task of financing your company.
Ways and MeansThe opportunities to fund your startups vary from your own finances to Venture Capitalists. Take a look.
Well, to put it more simply, to succeed in seeking financial support for your company requires a methodical approach. The precursors to your success are comprehension of the avenues available, a detailed study of suitability, and your readiness to pitch in an impressive way. Your willingness to finance it before you commit to yourself writing a self-check. Speak to family members, get input from the established winner's circle. Do your research, let your immediate family know what it entails. Don't sell yourself and your family the pipe dreams. If your savings are adequate to carry your venture to the next stage without impacting the quality of your family life, go ahead.
They're like a safety net for friends. They are available, empathetic, and extremely optimistic about your abilities. Tap. Tap. Reach out to all your friends and acquaintances with a passion. The secret is contact. Talk, talk, share. You might be looking for a low interest-bearing loan or interest-free loan. Once again, any long winding legal formalities or paperwork will be devoid of the mechanism of funding the need at this stage. And a source comparatively more positive than an unknown entity.
As the name suggests, this is the place to go to startups for guidance. Not just funding (and surprisingly they don't finance on their own) they provide the nutrition needed from all perspectives during the startups' neonatal stage. They are enhancers of early-stage growth and provide the much-needed multi-dimensional support services starting from sharing office space to accessing finance. The best place to sharpen up a new business venture and learn the steps it takes to find funders. Several domain-cutting organizations have set up incubators to healthily improve the startup ecosystem. From the education sector such as the Ahmedabad branch of the CII IIMA of the Indian Institute of Management (in partnership with the Gujarat State Government and the Indian Government) to the IAN Incubator of the Indian Angel Network, there are many incubators for the startups to approach.
While they work on similar lines as Incubators, Accelerators have a more well-defined mission and systems of programs. Usually, they provide short-term support services with hands-on advice from experts and advisors from different business, technology, and finance fields.
Join the unknown. That implies a degree of immaturity. It's been named in BC "Private Placement" before the crowdfunding -period! When putting to test in the early 1990s it was a phenomenal success. Develop a cozy business plan; target high net worth individuals who visit your city's elite clubs, representatives of prominent commercial and company houses, stockbrokers. Providing a fair and guaranteed return date. The added benefit you have with these people is that you're "identifiable," unlike in the companies, they invest. It gives investors a sense of confidence. Rope in a legal guy with the requisite paperwork to direct you.
This is what most entrepreneurs and people who aim to solve social issues do. A big way to hit social media. There are many facilitators to crowdfund (platforms) that will do the job for a fee.
How to Go to Finance Startup
Has your product/service made, an impressive video to highlight its uses and upload them onto the platform? Pitch for a relatively low percentage of your overall funds needed to produce investor-interest. Note, as Startups.co's Founder and CEO Wil Schroter says: "If you're trying to raise $100 K, start with a $10 K goal.
Funded by Governments
Enroll and participate in platforms funded by the government, such as Investor Hubs, Startup Hubs, etc. They give emerging and disruptive initiatives strong visibility. Higher exposure, which is also a great trigger for your start-up funding activities in the relevant area.
Banks are considered by far the most conventional financing path, a more stable and relatively quick route to secure funding for startups. The banking sector has also opened up to promote start-up ecosystems in the economy with creative schemes and policies. Banks can offer smoother and more affordable financing options with a large network and well-honed human resources skills. The near-total absence of borrowing costs for the borrower is a big benefit of Bank funding. But the downside is an optimistic outlook for the market. Another advantage of banks mobilizing funds is that there is more than one option open. Banks have strategies to cover the borrower's day-to-day operating costs, called Working Capital. It is beneficial to the entrepreneur, as the company funds the business' monthly overheads. Banks also finance the whole project including the cost of money. A salutary study of Product / Service Viability.
The credentials of company proprietors Financial security for the promoters Case analysis of comparative entrepreneurship Are performed before they finance the project.
These companies are similarly efficient and their processing time is also quicker compared to the traditional banking sector. Non-banking financial firms (NBFCs) are bad cousins of bank behemoths in a way but are well prepared with funds to efficiently cater to their small clients. For them, paper or legal work to is very straightforward and is considered to take a more holistic view of business ecology when it comes to start-up financing. Another differentiating factor is that Accelerators alone are offering seed funding to entrepreneurs. The selection procedure to be eligible for their funding is highly rigid. Most Accelerator programs are 90 days old for a period of six months during which the startups will learn the ins and outs of the company.
Microfinance institute, while similar to NBFCs, is a form of banking service providing microcredit on fair terms. But their visibility wouldn't be big and is scattered thinly over a wide segment of people. If the startup's fund requirement is relatively small, then microfinance firms are an ideal choice.
Even if it's a really remote path, startups still perform best. A plethora of online contests is up for grabs, offering tidy prize money. Not a bad idea to experiment, join in, and try your luck.
This itinerary is just a stop-gap arrangement, a prelude to the final deluge! This source is perfect for those startups who find themselves in a situation 'so close and so far,' The lender may be anyone-from a friend to a financial institution-depending on the quantity needed. Or even make use of the caps the Credit Cards provide.
They are high net worth individuals or companies working on the high-risk high return principle. Angel investors provide equal financing and the emerging markets and innovations are strongly analytical and deeply conscious. A traditional angel investor would rather take money off the startup and operate on ground level with the founders. Founders would have to give up the privilege of autonomous operation when an Angel investor expresses interest and the company funds. That's more than a justifiable trade-off because the company won't be desperate for funds.
That's the biggest go-to source for virtually all companies before they go public. VCs are flush with resources, experience, hands-on business knowledge in various fields, subject matter experts – it's a cornucopia in talent. Venture Capital firms are extremely discerning and highly analytical offering funding as well as guidance for startup growth. To get a good outcome, it is imperative for startups to put the best foot forward and show a truly captivating image before the VC. An impressive and crisp pitch deck outlining the issue that will be solved by their company, their USP, traction with facts and figures so far is critical in order to win VC startup funding.
Initial Public Offer (IPO)
Initial Public Offer (IPO) is the 'last' mechanism for entrepreneurs to raise funds for their companies. The procedure is fairly complex and full of numerous legislative stipulations and formalities. This route is highly advantageous and feasible for those companies that have an outstanding track record of profitability and credibility and are on the development band of high-velocity. Qualified startups should take the direction and guidance of experienced IPO experts such as consultants, merchant bankers, brokerage houses to go through the IPO process. Participating investors are given equity based on their level of participation in the startup. A successful IPO would mean the company has entered the higher market league with a scope to work in a wider arena.
For all startups not every path is suitable. Before taking the final leap it calls for an incisive study and critical analysis. Moreover, the paths to are often different depending on the startup stage. Efforts to find Startup funding should not be a trial and error exercise for your company.