You’ve probably heard success stories of Oyo, Nykaa, Swiggy, and others. These startups were lucky enough to flourish, while others, such as Dazo, Bite Club, Local Banya, and Purple Squirrel, never saw the light of day.
According to a recent report, 80-90 per cent of Indian firms fail during the first five years of operation, despite having fantastic ideas. Do you know why? Because of a lack of funds.
Do you want to discover some of the Best Ways to Fund Your Startup as an entrepreneur? Then connect with Coffeemug.ai, a professional networking site that specializes in assisting and financing startups.
Let’s have a look at some of the Realistic Ways to Fund Your Startup as recommended by Coffeemug’s expert team:
1. Bootstrapping
“Bootstrapping” is among the most common ways to fund your startup. Essentially, bootstrapping means you manage your firm with your own money. This money might come from your personal savings, mortgages, credit cards, and home equity loans.
Drawbacks of bootstrapping are: If your business fails, you may find yourself in a lot of debt that will have to be managed on your own.
2. Family and friends
Borrowing money from friends and family to start a business can be a reasonable alternative when considering some of the Realistic Ways to Invest in Your Startup. At times, persuading investors or financial institutions may seem difficult, but your friends and family always have trust in your vision.
So, if you seek loans from friends and family, make sure that each one of you has appropriate legal guidance. Also, be cautious with relationships, since borrowing money might strain family connections or cause you to lose valuable friends if loan repayment becomes tough.
3. Pitching contests
Pitch contests have the potential to be a game-changer for entrepreneurs prepared to take risks. During pitching contests, startups present their ideas to a large pool of investors, and the winners are awarded funds, networking opportunities, and, in many cases, significant business resources.
Startups can participate in pitching contests such as:
- Innopreneurs,
- Pitch Day
- Wharton India startup-challenge
- GSCOE – Samastha Palakkad
- Vibrant Gujarat Startup & Tech Summit
4. Start-up Grants
Startups may be eligible for grants ranging from $500 to $100,000. Grants are usually awarded to excellent business ideas, but they can also be given to a specific group, such as women, to assist them in expanding their business. Grants also provide mentorship benefits.
Some of the grants available in India are PRISM’s Technopreneur Promotion Program, Multiplier Grants Scheme (MGS), and Unlimited India.
5. Accelerators and Incubators
Both accelerators and incubators offer initial funding opportunities for startups. Accelerators are more concerned with scaling a business, whereas incubators are more focused on innovation.
These programs empower startups by providing technical resources and expertise, an early development fund, networking opportunities, collaboration spaces, lab offices, tutoring, and advisory services.
Some of the incubator programs in India are:
- CIIE IIMA
- IAN incubator
- Sine
- STEP
Some of the accelerator programs in India include:
- Marwari Catalysts
- DevX
- Axilor Ventures
- India Accelerator
6. Crowdfunding
Crowdfunding can be one of the Realistic Ways to Fund Your Startup if you have a unique idea and are good at social media. Kickstarter, Wishberry, Indiegogo are popular crowdfunding platforms in India. However, as there are many firms aiming for crowdfunding, you’ll need to create a lot of buzzes to break through the noise.
7. Loans for Small Businesses
India is emerging as one of the world’s largest startup hubs. The Indian government is keen on playing a major role in India’s startup journey and has come up with MSMEs and startups business loans. These loans have interest rates that are about 300 basis points lower than those offered by banks.
Some of the Business loans your startup can avail through government schemes are:
- Mudra Loan Scheme
- MSME Business Loans in 59 Minutes
- The Credit Guarantee Scheme (CGS)
- Stand Up India Scheme
8. Reach out to Angel Investors
Angel investors are typically rich individuals who aim to leverage their money by investing in projects that they believe in, particularly startups that may struggle to obtain more traditional forms of finance.
India now has between 6,000 and 7000 active ‘angel’ investors and several angel groups. You can reach out to Angel organisations such as AngelList, LetsVenture, Mumbai Angels for funding.
9. Contact venture capital firms
Consider venture capital if your startup has progressed and is generating revenue but you need funding for expansion. Venture capital funds are professionally run funds that invest in high-potential businesses.
These firms typically choose only 1 out of every 100 ideas proposed to them. Every investment undergoes thorough due diligence, which can take up to five months.
Some Noteworthy Advice by experts:
If you want to expand quickly, you’ll almost certainly require external funding. If you bootstrap and do not get external funding for an extended period of time, your startup will be unable to capitalize on market possibilities.
While the abundance of funding choices may make it simpler than ever to get started, founding members should consider how much financial support they truly require and opt for a sensible funding method.
What can Coffeemug offer?
Coffeemug is a worldwide community of successful entrepreneurs, investors, incubators, and mentors. They can assist you with fundraising, bank loans, and guide you about investment platforms, among other things. All you have to do is subscribe to Coffeemug and get valuable insights on Realistic Ways To invest in Your Startup?
FAQs
Q. If I want to seek a startup business loan, how old does my business have to be?
A. To qualify for a startup business loan, your company must be brand new or less than five years old. In addition, the company’s annual turnover should not exceed Rs. 25 crore.
Q. In India, which banks provide business loans to start-ups?
A. Many lenders in India provide beginning company loans, including Kotak Mahindra, HDFC Bank, TATA Capital, and others.
Q. Why do the majority of startups fail?
A. According to company founders, causes of failure are lack of funds, being in the wrong field, a lack of research, unfavourable relationships, inefficient advertising, etc.
Q. What is a Startup incubator?
A. Startup incubators are organizations that assist entrepreneurs in the development of their businesses, particularly in the early stages. Institutions with expertise in the business and technical worlds often provide the incubation function.
