When we are going in for setting up Startups, the first question that comes to mind is how to get funds? Very few new businesses know that the Startups have various funding options available to them, depending on their stage of development, industry, and specific needs. Here are some common options:
1. Bootstrapping: This involves funding your Startup with personal savings, revenue generated by the business, or contributions from friends and family. One drawback of this kind of funding is that while it allows for complete control over your company, it can limit its growth potential.
2. Angel Investors: Angel investors are affluent individuals who provide capital for Startups in exchange for ownership equity or convertible debt. They often offer expertise, mentorship, and networking opportunities in addition to funding. Some of the well-known Angel Investors in India are Anupam Mittal who has invested in 250 Startups across sectors like clean technology, consumer internet, mobile healthcare and Saas. Besides him, there are other Angel Investors like Ratan Tata, Kunal Shah, Rajan Anandan, director of Google India and Sachin Bansal.
3. Venture Capital (VC): Venture capitalists funding is usually for businesses that are high risk but also have high growth prospects. The VC funding is usually in lieu of equity. VC funding comes in multiple rounds and typically requires giving up some level of control.
4. Crowdfunding: Crowd funding is a way for companies and individuals to raise capital from a large group of investors, with contributions starting as low as $10. It is a standard model for entrepreneurs looking to fund their small businesses. Platforms like Ketto, Indiegogo, and GoFundMe allow Startups to raise capital from a large number of individuals in exchange for rewards, pre-orders, or equity.
5. Bank Loans: Small businesses or Startups can also secure loans from banks or financial institutions. However, this option is more challenging due to higher risk associated with the success of the Startups and the lack of collateral.
6. Grants: Some Startups could qualify for grants from the government agencies as well as non-profit organisation. These grants do not require repayment but come with very specific eligibility criteria and may require a very lengthy application process.
7. Corporate Partnerships: Startups also have the option of partnering with larger companies that can provide either funding resources, distribution channels, or access to customers in exchange for equity, royalties, or any other arrangements that they think fit.
Each funding option has its own advantages and considerations, so it’s important for Startups to carefully evaluate their options based on their specific circumstances and goals.
