In the last few decades, we have observed some major improvements in the startup industry in India. And when it comes to entrepreneurship, ensuring a secured source of funding becomes one of the most essential steps as it allows you to explore various tapped opportunities.
However, before looking for a proper source of funding for your business first you need to make sure that you have an appropriate financial strategy in place. As it will help you to describe your future endeavors and will make it easier for you to seek investments from angel investors, venture capitalists, and so on. Therefore to make things easier for you in this article, we will discuss some of the common sources of funding in India.
Crowdfunding Your Startup
Among several other funding options, nowadays crowdfunding is getting quite a bit of attention among entrepreneurs. The basic concept behind crowdfunding is that it allows more than one individual to invest in a business. In crowdfunding, the investors are generally required to provide a fixed amount of funding which might depend on several variables including your brand idea, objectives, financial strategy, etc.
The process can help you in a lot of ways. On the first hand, it gives your business certain credibility, that your idea is being accepted by several other experienced individuals in this industry. Apart from that, it can also assist you in raising your funding right, which will help you to turn your brand idea into a full-scale business.
Through Angel Investment
When you hear the term angel investors, it usually refers to those people who are always searching for startup ideas that might have some potential, and provide them funds in return for convertible depth or fixed equity in their business. Angel investors can either work alone or even form groups while investing in the startups. And on top of providing the funds, they can also help you with some business advice, to move your business on the right path.
Most of you might know that some billion-dollar companies such as Google or Yahoo were funded by angel investors in their initial stages. Depending on your industry it might be beneficial for you to approach an angel investor, as they have already got the experience of what goes on in the industry, and how you can leverage them to maximize your returns.
Through Venture Capitalists
Venture capitalists usually refer to those individuals who primarily look for small status who are in the initial stages. And by evaluating their growth potential, and their current standpoint they offer to invest in those startups. However, venture capitalists usually prefer an exchange of equity in return for their funds, and most of them tend to avoid giving debts. As these startups are in the initial stages, venture capitalists are already taking a lot of risk by funding these businesses. Therefore they only prefer to invest in some out-of-the-box business models, or in companies that are leveraging high-end technologies which can include IT, biotechnology, or eco-friendly technology.
Raise Funds Through Business Incubators & Accelerators
These types of funding sources are especially beneficial for startup founders who are in their early stages. The entrepreneurs can try joining some startup programs for raising their funds from startup accelerators or startup incubators. Some of you might have assumed that these two are the same concept, however, there are some key differences between them. In the case of accelerators, it primarily helps to accelerate the development of existing businesses. While in the case of incubators, their main purpose is brainstorming various innovative ideas, so that they can create an out-of-the-box business model. This means the latter one is primarily focused on innovation.
Typically these types of programs usually run for 5–8 months, and in this time frame, the entrepreneurs are introduced to several experienced mentors, investors, and some other fellow entrepreneurs in a similar industry. Therefore, when looking for a program make sure to choose the right one, as you have to decide for yourself whether you are looking for an accelerator or an incubator.
Without a proper source of funding, you can’t expect your business to scale and expand. Therefore make sure to go through all the funding sources mentioned in this article, and make a proper judgment depending on the current requirements of your business. And lastly always make an effort to focus on your vision, as it will act as the core of your entire business.
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