Today India is home to approximately 38,815 active startups. These startups include both funded and bootstrapped startups. The last pandemic year has given more importance to online businesses. In India, there are approximately 5,694 startup investors currently looking for worthy startups. India is in the best phase of giving a boost to all the startups with all the statistics mentioned above. There are now quite a few effective ways to raise funds.
Fundraising is a marathon spreading almost all over the world. Funding is an extremely integral part of the whole entrepreneurial journey. The first round of funding in a startup is known as seed funding. If you wonder how to raise funds for a startup in India, then this article can prove to be helpful for you. These are the most common ways to help your business get funds to turn into a successful business.
Crowdfunding Is An Effective Way To Raise Funds
Crowdfunding is a way to get small amounts of capital from multiple investors at once. With the help of social media and crowdfunding platforms, entrepreneurs can collect funds from a large number of individuals. It is not only a benefit for entrepreneurs but investors as well. An investor is allowed to select from a wide variety of startups. They can invest as little as $10 in any startup they prefer.
Lately, startup crowdfunding India is gaining popularity as it indicates that your idea of a perfect startup is appreciated by people. It can help you to get funds from the initial stages itself. Another way of getting crowdfunding is by asking your family, friends, and entrepreneurs you know personally. Your close people are the ones who trust your business plan more than anybody else.
Bootstrapping – Help Your Idea Yourself
It is a term used in the startup ecosystem to refer to the funds or anything needed in the initial stages of business, collected by the entrepreneurs on their own without the help of any investor. It is anything- personal savings, personal equipment, and garage space but investors. It is about getting the job done with whatever you have got.
The advantage of bootstrapping is that the owner gets to have complete ownership of the company. It reduces the stress of paying back the loan when entrepreneurs start earning profit. It creates smart spending habits for the long run. The growth of the startup might be limited because of the limited funds and resources available. Later, when you go for getting funds from investors, you can tell them you bootstrapped. This is a way through which investors can easily trust your startup idea.
Venture Capitalist- Receive Big Money In Short Term
Venture capital is a funding tool for entrepreneurs and an investment vehicle for wealthy individuals and institutional investors. These wealthy individuals are known as ‘Venture- capitalists (VCs).’ It is beneficial for startups that need a great amount in a short term. It is quite a competition to get the help of venture capitalists. VCs tend to work with startups that are expected to grow in the future. These investments are risky as they are illiquid but can also give impressive results if the venture turns out to earn profit. Venture capital firms raise capital through the help of banks and different corporations. These firms bring both wealth and expertise to a business. In return, they usually ask for control in the firm and their say in the decision-making of the business. Approximately 27% of the total active investors in the Indian market are from the United States.
Connect With Angel Investors
In exchange for a piece of the business, angel investors tend to provide startups with funding. Angel investors are individuals who have surplus cash. They look for potential startups to invest in. while there are plenty of angel investors, they tend to be selective of the niche of startups. They can either be found working individually or in groups. By getting ingo connect with different angel investors and groups of entrepreneurs, angel investors usually have large connections.
In the financial year 2020 which also happens to be the pandemic year of the world, angel investors secured 341 investment deals in startups. They not only fund the businesses but also provide management support to entrepreneurs. In FY 2019, angel investors secured deals with 275 starts which has shown an increase in the later year.