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Tag: Business Funding

  • 20 Alternatives of Raising Funds from Investors

    As you know men, money and material are three important resources of any business. If there is any shortage in any one of them, it could make your business suffer. But handling these shortages is a part of every business life cycle. Now you know that every business goes through this. And by keeping all these things with you, you could also make your business life amazing and beautiful.

    So, do you want to start a new business? Or wanted to expand an existing business? Both of these decisions have one concern in common. And that concern is nothing but strategizing a decision on ‘how to raise funds’. There is nothing to worry about. We are here to provide you 20 alternatives of raising funds from investors. You could choose among them as per your business’ needs. Let us see the complete story on the topic- 20 Alternatives of Raising Funds from Investors.

    1) Get some support from crowd funding
    2) Have a mentor in form of Venture Capital
    3) Advertise it through Initial Public Offer
    4) Win contests for your business plan
    5) Organize events to attract sponsors
    6) Take help from Business Incubator
    7) Banks loans were always there for you
    8) NBFCs also have attractive funding options
    9) Attract risk-averse investors by Debt Mutual Funds
    10) Team up with similar business ideas
    11) Tap for Private Equity firms
    12) You can also get some peer funding
    13) Issue debentures to raise investments
    14) Make them owners by giving secured preference shares
    15) Take help of some exciting government schemes
    16) Make your suppliers ‘The Partners’
    17) Give ESOP instead of salaries to your employees
    18) Business credit cards when there is urgent need of funds
    19) Make an agreement for ‘Line of Credit’
    20) Angels investors could become your healers

    1) Get some support from crowd funding

    Even small contributions from large number of people can solve your funding problem. If you have an ‘out of the box’ plan for your business, then you can expect huge funds in the form of crowd funding. This form of funding contains low risk yet you can earn high returns out of it. But you can promise your investors some returns in future.

    Also Read: List of 11 Best Crowdfunding Platforms for Startups

    2) Have a mentor in form of Venture Capital

    Venture capitalists look for those businesses that have attained some revenue stability. If you also fall in this ambit, then try to attract a venture capitalist for having investments. These investments generally contains high risk-return ratio. They can also give management support for your business. So, your business would get two things at one go, i.e. adequate funds and a reliable mentor.

    3) Advertise it through Initial Public Offer

    It is a platform where you can raise funds through public at large. First you have to get underwriter who will decide where to list your shares. Generally IPOs have high credibility and trust factor play a major role here. Investors also know that for issuing IPOs, you must have gone through various compliances. This could also help in building your brand image among investors.

    Steps of Fund Raising
    Steps of Fund Raising

    4) Win contests for your business plan

    Is your business plan unique? Do you expect high growth in future as well? Then it is time to take part in some contests and tell the world about your business plans. With this, your business plan would get enough recognition among peers. Also you could win funds in the form of prizes.

    5) Organize events to attract sponsors

    Events could become major platform to attract investors for your business. It would be a costly affair initially but you can expect various capitalists out from there. You just need to display your business plan effectively. With the help of this, you would make various connections for your future business endeavours as well.

    6) Take help from Business Incubator

    Business incubator are specially designed to help start up businesses to sustain and grow. They could provide you all necessary resources which are essential to run any business. There would be an immense support system for your business to prosper. Try to reach a suitable incubator which matches with your business interest.

    Also Read: Top 10 Startup Incubation Centers In India

    7) Banks loans were always there for you

    You have plenty of options in the form of bank loans. For this you need to display your effective business module. They would also enquire about your future growth prospects. Adherences to compliances were major hurdle for getting bank loans. But now governments are also helping to reduce the burden of compliances.

    8) NBFCs also have attractive funding options

    Non banking finance institutions have attractive funding options for your business. The process is more or less similar to bank loans. But the major difference is they come up with lower interest rates. As interest rates are low, they come up with high risks as well. There is often high liquidity crunch in NBFCs which make it riskier form of fund raising.

    9) Attract risk-averse investors by Debt Mutual Funds

    There are some investors who are risk averse but want some good returns out of their investments. You can target them by providing debt mutual funds. Debt mutual funds have stable returns and there is no loss of capital as well. Execute your business plan in an effective manner so that you could give your cost of capital on time.

    Also Read: List of Top Mutual Fund Startups in India | (2020)

    10) Team up with similar business ideas

    It is always good to make a team instead of going solely in the battle field. Try to find those who also have similar business ideas like yours. You would get more resources in form of men, material and money than earlier. Also the risk factor could be divided among partners as per ratio of investment.

    11) Tap for Private Equity firms

    These firms could provide you funds in return of ownership. They usually look for high prospering businesses. You could reach out to them by giving your future plan of action. Try to turn your USP work into your favour because these firms could make your business grow. Mark your presence among these powerful business houses and give your business a new outlook.

    12) You can also get some peer funding

    Peer funding is always being a trusted form of raising funds. You can deliver your attractive future plans to your friends, family, colleagues, etc.

    Also there would be low operational cost associated with this form of fund raising. But you can invite your peers to become partners. This is the most suitable form of investment which has high return with low risks.

    13) Issue debentures to raise investments

    Importance of Fund Raising

    Debentures provide fixed rate of interest to investors. They would give you long term investments.  For this you have to ensure stable earning to provide fixed rate of return to investors. This is not as high risky as equities. But on the other hand, this is one of the most secure forms of investments for investors.

    14) Make them owners by giving secured preference shares

    There are some investors who want to become owners but they adhere to risk of becoming owner. For investors, this could be a mixture of having debentures and equity at one basket. It is an attractive form of raising funds which provide stable returns with an ownership status.

    15) Take help of some exciting government schemes

    Nowadays government is also coming up with amazing plans to support businesses. They know that these businesses help to generate employability in nation. Try to reach to those plans of government which can support your business endeavours. Also the cost of capital is very less in this alternative.

    16) Make your suppliers ‘The Partners’

    You usually need huge funds to make payment to your suppliers. But what if you make those suppliers as your partners? This could become a great venture where there is no operational risk for your business. Also you would get reliable and trustworthy supplier who is directly associated with the profits of your business.

    17) Give ESOP instead of salaries to your employees

    Salary expense is one of the major expenses of any business. You could save this expense by giving employees ‘Employee Stock Option Plan’. Transform them as owners and they would also get motivated to work in a more effective manner. This would be a low cost of capital for your business.

    18) Business credit cards when there is urgent need of funds

    These credit cards are workable when there is urgent need of funds. This form of funding is usually having high cost of capital. But when there is urgency no cost is a high cost. You just have to be little careful while using them because it could make your business debt trap.

    19) Make an agreement for ‘Line of Credit’

    Line of Credit is generally an agreement with banking institutions. It could provide you funds until the maximum limit is reached. You can borrow money at anytime and from anywhere which make this source of funding as flexible one. But there is a condition that you have to adhere as per the agreements.

    20) Angels investors could become your healers

    Nowadays there are many professionals who look for various investment opportunities. These professionals usually have affluent earnings. What they want is to earn extra profits from those earnings. They merely look for start-ups who have high potential of growth. Try to reach out to them and make sure you deliver your future plans in an effective manner.

    Also Read: List Of Angel Investors In Bangalore

    Conclusion

    Raising funds is an important task for every business. For you also, it could be a major decision for your business. But you have to keep one thing in mind that you should not depend on one alternative only. Take alternatives as eggs and see this. Remember if you move ahead with only one egg in your basket, there is a possibility that one egg may broke down in middle of the road. In this situation, you won’t have any other alternative to go ahead. So, try to have bundles of eggs in your basket. If one egg is broken, then there would be not much concern for your business. And you can move ahead with rest of them.

  • How Entrepreneurs are Helping to Fight COVID-19?

    Needless to mention, Coronavirus has affected every aspect of human life. Lockdowns and social distancing particularly has had immediate effect on several banking activities. Thus, at the same time, many efforts are being made to raise funds and help startups and SMEs. Experts in the sector have greatly underscored the need for focusing on digital channels and platforms during times like these. After the coronavirus wiped $7.6 trillion off the world’s stock markets in four days, global health groups are asking companies, governments and even the public for billions of dollars to fight the contagion. The World Health Organization(WHO)set up a website seeking contributions from anyone in an attempt to raise at least $7 billion.

    On Tuesday (March 24) evening, Prime Minister Narendra Modi announced that the whole country has been put on lockdown and had announced INR 15,000 Crore package to strengthen the Indian healthcare infrastructure in India. The fund will be used to develop testing facilities, personal protective equipment and procure more isolation beds, intensive care unit (ICU) beds and ventilators. Moreover, the government will be using the fund to train paramedical and medical staff helping in treating affected patients. Earlier in the day, finance minister Nirmala Sitharaman had relaxed timelines for filing taxes and raising default thresholds for avoiding bankruptcy proceedings. She had added that the government will soon announce a package to address the coronavirus impact on the economy.

    In one such efforts, Prime Minster of India, Narendra Modi announced a special emergency fund for the nation to fight crisis like COVID-19 on March 29. Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund), is a dedicated national fund with the primary objective of dealing with any kind of emergency or distress situation, like posed by the Coronavirus pandemic, and to provide relief to the affected. Hours after the announcement, entrepreneurs and celebrities from various walks of life have come together to show their appreciation.

    Ratan Tata

    Joining a number of India Inc leaders who are doing their bit in their own way, Ratan Tata has committed Rs 500 crore for protective equipment for frontline workers, respiratory systems for treatment of increasing cases and testing kits in the fight against COVID-19. In a tweet on March 28, Ratan Tata shared a post detailing how Tata Trusts and the group companies will help as India battles to contain the spread of COVID-19 crisis. Ratan Tata tweeted, “COVID-19 is one of the toughest challenges we will face as a race. The Tata Trusts and the Tata group companies have in the past risen to the needs of the nation. At this moment, the need of the hour is greater than any other time.” The amount would be used for personal protective equipment for the medical personnel on the frontline, respiratory systems for treating increasing cases, testing kits to increase per capita testing, setting up modular treatment facilities for infected patients, and knowledge management and training of health workers plus the general public.

    Following Ratan Tata’s announcement, N. Chandrasekharan, chairman of Tata Sons, announced an additional Rs 1,000 crore in support towards COVID-19 and related activities. He said in a statement, “We will work together with the Tata Trusts and our Chairman Emeritus Mr. Tata and would be fully supporting their initiatives, and work in a collaborative manner to bring the full expertise of the group. In addition to the initiatives articulated by Tata Trusts, we are also bringing in the ventilators necessary and are gearing up to also manufacture the same soon in India.”

    Mukesh Ambani

    One of the top business tycoons of India, Mukesh Ambani has also contributed in his own ways. In collaboration with the Brihanmumbai Municipal Corporation (BMC), the Sir HN Reliance Foundation Hospital has set up a dedicated 100-bed centre at Seven Hills Hospital, Mumbai, for patients who test positive for COVID-19. Reliance Industries Limited is enhancing its production capacities to produce 100,000 face-masks per day and a large number of personal protective equipment for the nation’s health-workers to equip them further to fight the coronavirus challenge. Reliance Industries has donated Rs 500 crore to PM’s Citizen Assistance and Relief in Emergency Situation (PM CARES) Fund to help government in the fight against coronavirus.

    Similarly, other companies in India have come forward to contribute. Digital payments company Paytm said it aims to contribute Rs 500 crore to the fund. For every contribution or any other payment made on Paytm using the wallet, UPI and Paytm Bank debit card, the company will contribute an extra up to Rs 10, Paytm said in a statement. Also, Flipkart-owned PhonePe also launched a donation drive and said it aims to contribute up to Rs 100 crore to PM CARES Fund towards fighting coronavirus crisis. Infosys Foundation has also committed Rs 100 crore to fight COVID-19. Uday Kotak, managing director of Kotak Mahindra Bank announced a Rs 60 crore donation. On March 22, Anand Mahindra, CEO of Mahindra and Mahindra also offered the group’s hospitality arm as a medical care facility and said the group will work on how its manufacturing facilities can manufacture ventilators. Engineering and construction giant Larsen & Toubro (L&T) on Monday announced Rs 150 crore donation to the PM-CARES Fund to fight the coronavirus outbreak and said it has set aside over Rs 500 crore per month to support about 1.60 lakh contract workers. JSW Group, an Indian business operating in metals and mining has announced contributing Rs 100 crores to the prime minister’s citizen assistance and relief in emergency situations (PM-CARES) fund in the light of the ongoing Coronavirus outbreak. Paint and decor company, Asian Paints on Monday has announced contributing Rs 35 crores towards Covid19 Relief Fund.

    However, startups and small businesses were getting anxious about the support from the government considering the pressure they are facing to keep the operations running smoothly in the light of funds being scarce and market demand being low. This combined with the pressure to plan for remote teams due to the lockdown across India. Amid the country-wide lockdown, startups have been calling for a relief package for small businesses and the startups which are struggling as the coronavirus pandemic continues to hamper daily life. A Reuters report has now said that the India government may bring an INR 2.3 Tn ($20 Bn) relief fund by the end of the week for the poor sections of the population and businesses. For this, various entrepreneurs have showed willingness to help.

    Mark Zuckerberg & Bill Gates

    The Chan Zuckerberg Initiative, the philanthropic arm of Facebook founder Mark Zuckerberg and his wife Priscilla Chan, has announced plans to team up with the Bill and Melinda Gates Foundation to donate USD 25 million to a research fund exploring possible COVID-19 treatments. Separately, a coalition backed by Bill Gates and Norway is considering a crowdfunding campaign as they seek to attract about $2 billion to speed up development of vaccines. Mastercard and charity foundation Wellcome are also partnering with Bill & Melinda Gates as part of the initiative, which started with $125 million in seed funding at its launch. The goal of the project is to develop affordable treatments to COVID-19 that can be distributed at scale.

    In the same way, Facebook wants to help small and medium-sized businesses (SMBs) survive the coronavirus pandemic. Now it is offering $100 million in grants to 30,000 companies in over 30 countries. Sheryl Sandberg, chief operating officer of Facebook, said on her page on Tuesday (March 17) that the social media giant(Facebook) wants to “do our part” to help with the “enormous challenge in front of us.” To that end, the company is extending a total of $100 million in cash, as well as credits for advertising, to a maximum of 30,000 eligible small businesses.

    Similarly, Facebook’s Head of Health Kang-Xing Jin said in a blog post that Facebook is also supporting COVID-19 fact-checkers with a $1 million grant, in partnership with the International Fact-Checking Network (IFCN). The funds will be used to launch a program to increase capacity during the coronavirus pandemic. Facebook has also opened a special hub to help SMBs during the pandemic, and is planning virtual training through Blueprint, its free e-learning training program. The company’s goal is to assist companies “in this new and unsettling environment.”

  • How is Narendra Modi helping Startups Fight against the Coronavirus Outbreak?

    Due to Coronavirus outbreak, every aspect of business is suffering through many problems and challenges. Flight, hotel booking firms are the worst hit. There is stupendous drop in demand of gig economy. Whereas, at the same time, video conferencing providers and online education companies, messaging platforms and of course healthcare & pharmaceutical companies are witnessing a boom in demand but the situation has become for worse for the startups & small scale businesses as they have limited sources and capital.

    Effect of COVID-19 on Startups

    With reduced revenue and uncertainty caused by the COVID-19 outbreak, various tech startups not just in India but across the globe are temporarily letting go of workers to help keep their businesses survive during this collapsing economic period. In the past couple of weeks, the situation has become more extreme with a ‘State of Emergency’ being called in some countries, leaving other regions unsure of what’s to come next. Social distancing mandates are forcing businesses to shut down and heavily reduce staff during COVID-19 outbreak. The labour department is facing a rush of unemployment insurance claims which is likely to increase in the next few weeks.

    Coronavirus crisis is also affecting many aspects related to startups. For instance, postponing the EU-Startups Summit to April 2021. The EU-Startups Summit gathers over 1,500 founders, startup enthusiasts, corporates, angel investors, VCs, and media from across Europe. The two-day event is a great opportunity for networking, and a meeting point for aspiring entrepreneurs and investors who are aiming to build international tech companies. This summit was planned to take place on May 28-29 this year but now it is postponed to April 2021.

    Government’s Aid to Startups

    Today, the world is collectively dealing with the spread of Covid-19 and taking emergency measures to contain and eventually eliminate the virus. One such measure was taken by Indian government. Prime Minister Narendra Modi saw the power of the digital medium that can be utilised to serve the country and encouraged many of us to go all out to build a nationwide digital infrastructure. Modi’s ‘Digital India’ mission enabled India to build a robust mobile broadband infrastructure which accelerated the rise of technology startups in a short span of time. This is now coming to play a very vital role in supporting the PM’s call on social distancing while keeping the country moving during coronavirus pandemic.

    According to reports, a mega exercise to increase Indian startups’ visibility globally is in the works. For this, the government planning to hire a consulting firm to evaluate the progress of the Startup India programme to chalk out an action plan to attract investment and identify bottlenecks which prevent businesses and high-net-worth individuals from investing in them. The consultant will identify challenges in\ regulatory approvals, taxation, ease of doing business, global expansion and facilitate startups in getting access to markets such as in private and public procurement, both in India and abroad.

    COVID-19 Solution Challenge

    The government of India has realised the need to open up the search for solutions to the startup ecosystem with the ‘Covid-19 Solution Challenge’. On March 16,2020, Prime Minister Narendra Modi announced the launch of the challenge on the Twitter and urged startups and entrepreneurs to come up with their technology-backed solution to curb the coronavirus outbreak. Prime Minister Narendra Modi has appealed to public to share any technology-driven solutions for strengthening the fight against COVID-19, saying such efforts can help the government and make public join the mission against the virus.

    PM Narendra Modi announced the Challenge on Twitter on March 16

    PM Modi said, “Harnessing innovation for a healthier planet. A lot of people have been sharing technology-driven solutions for Covid-19. I would urge them to share them on the government-citizen engagement platform MyGov.in.”

    According to the MyGov platform, startups and individuals can send their ideas to help the government in fighting the coronavirus outbreak. Suggestions sent in will be evaluated by the government and some of the ideas will be adopted. The last date of submission of ideas for the Covid-19 Solution Challenge is on March 31. Participants can either send a document or a YouTube video of the idea using the MyGov Platform. The solutions that are deployed by the government will also receive rewards. INR 1 Lakh, INR 50K and INR 25K have been promised to the top three ideas respectively. This amount can be used as funding in startups. So it’s a good opportunity to earn funding just by pitching the idea.

    The government said that it has already started to get inputs from individuals and startups that have developed technologies and innovative solutions in areas such as bioinformatics, datasets, applications for diagnostics and more. These technologies are expected to soon become part of the government’s efforts in the fight against the coronavirus.

    Also Read: These Brands will Generate Massive Revenue During the Coronavirus Outbreak

    With increasing cases of people getting infected by the novel coronavirus, a group of entrepreneurs and venture capitalists had written to Prime Minister Narendra Modi suggesting a lockdown starting as early as March 20 across the impacted cities for two to three weeks; to which PM Modi has taken action by implementing Section 144 on account of which only allowed shops can remain open till March 31. So, it has become almost ceased all the operations for startup till March 31.

    According to experts, there are still ways to keep the operations going during lockdown too. According to top venture capitalists and entrepreneurs from India and China, overcommunication, keeping a cash runway and having a fixed routine despite working from home are some of the keys for startups to deal with the fallout from the novel coronavirus. While China is returning to normalcy and business as usual, the experiences of Chinese firms and entrepreneurs can serve as a reference point for Indian founders, where cases of the virus are still rising rapidly.