Article | Foundr MAGAZINE

How to raise funds for startup business in India- A detailed guide

Funding for start-ups denotes making investments in new companies for the expansion of the business. Today, many start-ups opt for raising funds from 3rd parties to expand their scale of operations. Starting a new business always requires enormous investment, and many times, it becomes tough for founders to arrange the necessary funds. Hence, the founders need to search for outside financiers who can provide the necessary funding for their business. However, before accepting the investment, it is essential to understand How to raise funds for startup business in India.

How to raise funds for startup business in India- A detailed guide

Evaluate the requirement 

At first it is necessary to evaluate the exact requirement of funding. It is also necessary to check the amount of funds required for the business. The company experts should prepare a projected report that clarifies the exact investment requirements. Top angel investors will go through the projected report, and accordingly, they will invest in the company. 

Government loan Schemes 

Besides private financers, the Indian Government also plays a vital role in boosting new organizations. The government often launches several loan schemes that allow every start-up to get good support for their business. All startups in India can opt for loan schemes like the Samridh Scheme, Digital India Bhasini, Start-up leadership program, Start-up India Initiative, and more for expansion of the business.

Search for Angel investment 

Today, many individuals are interested in investing their surplus money in start-ups in India. Accepting investment from these individuals is known as angel financing. However, these investors usually ask for a high return from the business profit. Start-up founders are required to interact with these investors directly and discuss the financial requirements with the investors. 

Identify the right investor

While you notice that your start-up needs funding from outside financers, you need to search and identify the right startup investors for your business. At first you need to determine the active investors. You also need to understand the preferred sectors of those investors. The geographic location of investors is always a mandatory part to check unless start-ups may face problems in the future.

Opting for Bank loans

Private or Public sector banks are the best sources for raising funds from start-ups. Applying for loans from banks is more reliable, and banks offer loans for startups in India at easy installments. So, raising funds from banks is the best option for many newly launched companies.

Loan from Venture capitalists

Today, venture capital has emerged as one of the most reliable and effective ways of funding new companies. Start-ups can find many VCs that play a significant roles in offering the necessary financial support by investing in these organizations. Venture capitalists are interested in investing in those start-ups that have excellent growth potential. VCs are also interested in seed funding for startups that ensure high return. However, many VCs avoid funding start-ups at too early or too late a stage due to extreme competition in the market.

Seeking help from incubators

Experts often suggest that start-ups should join accelerator programs that help new organizations to grow networks. These programs mainly aim for mentorship development so that a start-up can grow better. 

Online Crowdfunding

At present Crowdfunding has become extremely popular in recent days. Here, you will find an online portal of group individuals who provide startup funding to many newly developed companies. Start-ups can get in touch with these groups of investors via online portals and can raise necessary fund for their business.

Peer-to Peer financing 

This is also a popular way to raise money for start-ups. Peer-to-peer lending or financing is a way where no mediators are involved in the entire financing process. Here, borrowers can borrow money from lenders at a higher interest rate than private and public banks. 

How to raise funds for startup business in India- Summary

Every start-up requires financing from different sources for the expansion of the business. Start-ups require investments for different stages like pre-seed stage, seed stage, series A stage, series B,C, D & E stage, and exit stage. New organizations can raise funds in different ways, like opting for seed fund schemes, or finding funds from angel groups of investors, VCs, etc., to expand the business.

 

Scroll to Top