Money is needed to make any startup or business idea come true. Therefore, if money is called the bloodline of business, then there will be no exaggeration in it. Recent studies show that, out of the startups that are started, more than 90% of the startups do not run even for a year, and they have to close their business within a year.
And the main reason for the closure of these startups is the lack of funds. It becomes clear from this fact that money is needed to carry forward the journey of making a business idea a profitable business smoothly. If there is a shortage of fuel, even a brand new vehicle is unable to move forward. Similarly, if there is a shortage of funds in the startup, then it cannot be run as a profitable business.
In such a situation, many entrepreneurs who are running their own startup, or are thinking of starting their own business. The biggest question in their mind remains what methods they can adopt to raise funds for their business or startup. Although when the entrepreneur will need more funds for his business or startup, it depends on the type and nature of the business. But it is necessary that to make any business idea profitable business, money is required.
A good earning business idea, strong will is required to start a startup or business. Along with this, funds are also needed to implement it. So if you are also thinking of starting a startup of your own, or are currently thinking of locking the startup due to a lack of funds. So before that, also look at the methods given here to raise funds for startups. Do you know whether the effort to raise funds in these ways can fulfill your dream?
1. Funding with your own money (Self Funding):
Any person who thinks of starting his own startup, then he knows that initially, he will have to invest money from his own savings. Because unless you have an innovative business idea and full proof plan, it is a bit difficult to get funding from outside investors. Therefore, starting a startup with your own savings is a great option for any entrepreneur. If the entrepreneur himself does not have that much money, then he can ask his family members and relatives to invest money, because it is often seen that the relatives also provide money at a low-interest rate.
But self-funding will be able to effectively solve the fund related problem of the entrepreneur only when the startup of the entrepreneur is in the initial stage, and he needs comparatively less funds. Apart from this, if the entrepreneur applies for a loan from any formal source like a bank or other financial institution, then there is also a question about how much money he is investing in his startup.
2. Find an Angel Investor for Your Business
Such investors who do not have any shortage of money, they can also be individual individuals, and can also be a company or organization. It is their business to invest money on new earning business ideas and get a good return. That is, individuals with surplus cash who are ready to invest in startups should angel investors is called. So if your startup is facing a shortage of funds, you can find an angel investor for it.
Since the investments made by angel investors are more risky, they invest only in those startups which they think will give them good returns in future. Many famous angel investors in India include Mumbai Angels, Indian Angel Network and Hyderabad Angels. Interested entrepreneurs can contact them directly.
3. Raise Funds Through Crowdfunding
Crowdfunding as the name suggests is money collected by the crowd. Currently, crowdfunding is becoming a new and popular way of raising funds for startups. Because in this the entrepreneur can raise funds for his startup not only from one person but through more than one person at the same time. What is crowdfunding and how does it work? We have already given this information.
If you are also looking to raise funds for your startup or business, there are currently a number of crowdfunding platforms where you can register by writing in detail about your business and its funding requirement. However, getting money from crowdfunding also depends on whether your business or startup is able to attract the attention of the people present on that platform or not.
Online crowdfunding platforms are also used for other purposes such as social causes, charity, disaster, illness, events, relief etc. Major crowdfunding platforms in India include Kickstarter, Keto, Catapult, FuelDream, Fundable, Indiegogo, Milap, Wishberry, etc.
4. Find Venture Capital for Startups
Venture capital typically invests largely in startups that are still making profits, and are expected to make more profits in the future. Venture capital buys stake in a startup, i.e. equity, and it is often seen that at the time of acquisition, they exit by making huge profits.
Entrepreneurs who are already running a profitable startup but now want to expand their startup can look for venture capital to raise funds. Who are Venture Capitalists and how do they work? We have told about this in a separate article.
5. Get Business Loan Under Government Scheme
Several schemes have been run by the Central and State Governments to encourage startups and entrepreneurship in India. Under which a provision of thousands of crores has been made to provide loans to the needy and deserving people. Apart from the Bank of Ideas and Innovation programme, the government has also released thousands of crore startup funds every year.
It is meant to say that at present the Government of India has started many such loan schemes, whose purpose is to encourage and promote startup enterprises, women entrepreneurs associated with micro small medium enterprises, entrepreneurs belonging to SC / ST. Pradhan Mantri Mudra Yojana, Prime Minister’s Employment Generation Programme, Credit Guarantee Fund Trust etc.
6. Apply for Bank Loan
By the way, whenever one has to take a loan for the fulfillment of business or personal needs, he finds the easiest and most effective way to take a loan from the bank. But we all know that banks also offer loans to those who feel that they are able to repay their loan on time. And this capability, incapacity is ascertained by the Bank through the financial documents of the applicant.
So if you think that the banks will agree to give you a loan, then you can also raise funds for your startup by taking a loan from the bank. Almost all the commercial banks available in India whether they are in the private sector or the public sector are offering different types of business loans.
It has also been seen that generally startup enterprises meet their shortfall of funds only by taking loans from banks. Because they prefer to take loans from banks and they find the process more convenient than others
7. Get loans from NBFCs, MFIs
As we have mentioned earlier, getting loans from banks is the first priority of startup enterprises. But banks do not provide loans to every startup, rather they only provide loans to eligible enterprises. In such a situation, if you do not qualify to get a loan from the bank, then we are going to tell you how you can raise funds for your startup.
Entrepreneurs who do not qualify for a bank loan have the option of microfinance companies, non-banking financial companies. Such companies provide financial services to those who do not have access to traditional banking. Although large loans cannot be expected from such companies, but for those who have limited requirements, such companies can be a good option.
8. Fulfill Business Credit Cards
Ever since the number of startup companies is increasing in the country, and every year hundreds of new startups are taking shape. Keeping in view their financial requirements, banks have also increased the business credit cards significantly. Therefore, such entrepreneurs who have their own business credit card can use it due to lack of funds. If they want, they can buy from it, and if they want, they can also withdraw some percentage of cash.
But keep in mind that never forget to make the credit card payment on time, otherwise you may have to pay a lot of interest in the form of penalty.
9. Raise Funds by Winning Contests
In India too, there are different types of competitions among startups. Many of these competitions are organized by the government and some independent agencies organize many competitions. If you are feeling short of funds, you can register your startup for various competitions. If you win any one of these competitions, then you not only get a reward, but your startup can also come in the eyes of investors. Due to which your startup can get many big benefits from winning the prize.
FAQ
Question – How to get money for business?
answer – The business idea on which you want to do business, if there is every possibility of innovation and success in it. So, apart from taking bank loans, crowd funding, informal loans from relatives, you can also approach angel investors etc. to raise funds.
Question – Which is the best way to raise money for a startup?
answer – Depending on the situation and time, any of the above mentioned eight methods may be best.