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Tag: crowdfunding for startups

  • How to Get Pre-seed Funding for your Startup in India?

    The era of startups and business has dramatically changed in the past decade and especially after the Covid-19 pandemic. Hence, it is very important for all of us to know and understand what the funding landscape looks like today and in the future. Earlier, the only goal for businesses and entrepreneurs was to get Series-A funding. If one did not have enough traction, the only way forward was bootstrapping.

    Fortunately today, startup investing has become more competitive and new level funding categories have made their way to the market. One of the increasingly popular funding ways for emerging companies and businesses is Pre-seed funding. This funding requires you specific preparation so as to set yourself and your business up for growth and success.

    The Pre-seed investors have been a boon to the startups as they allow them to raise the funds which they require and bring minimal viable products (MVPs) to life. This article is a guide for you to know what Pre-seed funding is and how to get pre-seed funding for your business or startup in India.

    What is Pre-seed funding?
    How to Get Pre-seed Funding in India?
    Where to find Pre-Seed Investors in India?

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    A step-by-step process of fundraising

    What is Pre-seed funding?

    In order to help a startup to start with its primary and base operations, an investor makes a small investment into the business. These investors or individuals invest in the business when they know the founder personally or hold strong faith in the business idea. This activity of investing is known as pre-seed funding.

    There are many platforms that provide pre-seed funding in return for a stake in the startup or the business idea. Pre-seed funding can also be obtained through crowdfunding.

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    How to Get Pre-seed Funding in India?

    It might sometimes seem nerve-racking for you to meet the pre-seed investors as in the initial stage one might not see the vision you carry. Like any other funding round, your key is to have your finances organized and have a clear business plan that will be used by you. Here are the tips through which you can acquire Pre-seed funding.

    Have Financial and Profitable Clarity

    At this stage, it is very important that you set an easy and clear outline of your business’s path to profitability. If you have a clear and thoughtful business plan that serves as a long-run road map for your startup then there are chances of you grabbing the investment.

    If you keep your financial estimates attainable and concise; put emphasis on the business strategy and transparency; prove your credibility, you can win the investor’s trust and funding.

    Keep your Business Proofs Ready

    When you pitch in front of investors, the key to winning the investment is that you show proof of success for your business idea. Test your business idea in the market, communicate your assumptions clearly, and transparently share your business plan with the investors will help you to get the pre-seed funding for your startup.

    Vouch for your Intellectual Property

    Even when you do not have any cash in hand and hard assets for your business, you can show your credibility to the investors. One of the best ways to do this is to make them believe in your intellectual property.

    If you are able to demonstrate your business idea effectively and ensure the investors that you will work towards your brand and will protect them from infringement by other business entities, you show your company’s credibility to them and make your pitch more investable.

    Show your credibility

    One of the most effective ways to show your worthiness is to be clear and confident about your past records and professional accomplishments. It is important that you present all the sources of funding that you would have acquired in the past (if any), and present all the successes that you have had in the past. Become very sure to explain to the investors how you were successful and support it with tangible and quantifiable evidence.

    Where to find Pre-Seed Investors in India?

    After you have got to know about the steps to acquire Pre-seed funding, you need to now find the investors. This is one of the most challenging parts for many entrepreneurs.

    Today’s investors do not accept unsolicited pitches and usually, they let them pitch you after an introduction from someone within their network. Here you will find a few ways to get your business to those who will invest in it and can fund it.

    Family & Friends

    Using your personal connections and network to invest in your business in the initial stage is a very flexible and safe option for pre-seed funding. People who have seen your journey, dedication, and passion will be willing to put funds into your ideas. If your friends and family see potential in you and your startup idea, then they would be definitely investing their money in your business.

    Pre-seed Funding Platforms

    Number of early-stage venture capital deals worldwide
    Number of early-stage venture capital deals worldwide

    In the industry, there are many pre-seed funding platforms that encourage businesses and startups at their base-development stage by providing them with small amounts of funds to initiate their business activities. Through Pre-seed funding platforms, your business will get an opportunity to start your operations and get access to the market.

    A few common Pre-seed funding platforms include:

    • Unitus Seed Fund
    • Infuse ventures
    • Kae Capital
    • Blume Ventures

    Crowdfunding Platforms

    Crowdfunding is an excellent way to generate pre-seed funds for your business or startup. Though equity-based crowdfunding is illegal in India, donor-based and reward-based crowdfunding options are entirely legal. Raising a small amount of money from large masses through crowdfunding platforms can be a good way of acquiring pre-seed funds for your venture.

    Business Incubators

    There are various incubators in the industry who are willing to make small-scale investments into startups and businesses in the form of pre-seed investments. Their aim and motive are to support and assist early-age entrepreneurs in pursuing substantial market opportunities. In India, a few great incubators are:

    • Advantage
    • Seedfund
    • StartupXseed
    • Incubate Fund India
    • Better Capital Labs

    Pitch Competitions

    One of the best ways to get in front of investors is to participate in pitch competitions. All you need to do is practice your pitch, mark a good impression, prove yourself and strike a pre-seed funding deal. Such startup pitch competitions have become very common today and it is a very good way of winning funds for your business idea.

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    Conclusion

    Although anyone can bootstrap, some unique and revolutionary ideas need Pre-funding to be invested in the idea. Some people give up on their dream because they think getting pre-seed funding is near impossible and in fact, magical. But not the real entrepreneurs. They hustle, plan and reach the best person who believes in their ideas and invests in them. They find such people by strategizing and expanding their network, at the same time.

    Remember, you can reach anyone. There is a difference of only 6 people between you and that person. And if you keep expanding your network, you will reach that perfect investor who actually believes in your idea and invest in it.

    FAQs

    What is Pre-seed funding?

    In simple words, Pre-seed funding is the capital needed to start any business. It is acquired by investors to develop the business in return for equity in the company.

    What is the average amount of pre-seed funding in India?

    Most startups expect $500,000 or less pre-seed funding from investors.

    How much equity is given in the seed rounds?

    Most founders usually sell 10% to 20% equity in seed rounds.

    Where can entrepreneurs find Pre-seed funding?

    Entrepreneurs can find Pre-seed funding from several sources:

    • Family & Friends
    • Pre-seed Funding Platforms
    • Crowdfunding Platforms
    • Business Incubators
    • Pitch Competitions

    How to get pre-seed funding in India?

    Some tips to get pre-seed funding in India:

    • Have Financial and Profitable Clarity
    • Keep your Business Proofs Ready
    • Vouch for your Intellectual Property
    • Show your credibility

  • How to Fund and Grow an E-commerce Platform?

    The article is contributed By Prateek Ruhail, CEO and  Co-Founder of Vanity Wagon.

    In the recent past, a lot of businesses have gone digital incalculably. This was accelerated by the pandemic which curtailed individuals’ ability to visit physical marketplaces, and they were instead forced to shop from e-commerce websites. And now, the shoppers include individuals from all walks of life, a medley of cities and different income statuses. A report revealed that from April-May 2020, there was an 11% increase in first-time online shoppers. The e-commerce market in the country is exploding and is set to grow at a 30% compound annual growth rate in the next 5 years, serving 300-350 million shoppers in the next 3 years. This growth in e-commerce businesses has warranted a deeper understanding of how to fund and grow such a platform.

    ECommerce Funding

    Financials and cash-flow is the toughest problem to navigate when starting your own e-commerce business. It’s extremely pertinent to clearly chalk out a plan and figure out exactly what you need the funds for. This money is usually used to grow, cover expenses (marketing and operational) and for inventory costs.

    How to Get Funds for Your ECommerce Business?

    There are numerous ways to fund your business. The most common of these are using your personal savings, bootstrapping- asking family and friends for help, and crowdfunding – collecting funds from the public. There are also grants- obtaining money from a public body, equity financing- giving up equity for a cash investment, debt financing- selling debt instruments like bonds to investors, revenue-share financing- in the form of royalties, and bank loans. Each company has its own unique business model due to which some of these methods might work better as compared to others. Even at different stages of the business’ growth- different methods might be appropriate.

    Investors’ Alignment to Your Business Objectives

    Not every investor fits perfectly into the puzzle. If you have an investor that doesn’t understand the overall vision of the company, and does not agree on a strategy, it can actually be counterproductive to have them on board. Thus, it is extremely important that you and your investors align on the objectives and plans of action for the company.

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    Growing Your ECommerce Platform

    After starting the business and getting the infrastructure in place, the funds are used to grow the company. There are several growth strategies that can be implemented to maximise profits-

    1. Affiliate marketing – Affiliate marketing is a business strategy whereby you can increase your business reach by allowing social media accounts and websites to market your products and show advertisements for a specific percentage of your sales. This exposes your brand to a larger audience, thereby growing it.
    2. Target audience – Identifying your target audience is pertinent to understanding the demographics and trends among those you are selling to and modify your marketing and operational strategy accordingly. If your product or marketing is irrelevant to your target, there is no point.
    3. Repeated business – Usually, the customer acquisition cost is extremely high, but converting an existing customer into a repeated buyer is easier and also increases sales. Luring customers back in using tactics like offers, discounts, bundles, customised coupons, and maintaining a good relationship with them is likely to grow your business.
    4. Market basket analysis – Enticing customers to purchase commodities that are linked to one another through market basket analysis is an excellent way to grow your business. For example, if a customer is buying clothes, there can be options of accessories that go with the whole look. Or, if a customer is buying chips, there should be a bundled with different recommended dips etc.
    5. Upselling products – Upselling refers to getting customers to purchase high-end and more expensive products instead of their cheaper alternatives. This can be done through things like ‘Amazon’s choice’ or even comparing different products so that the advantages are easily recognisable.
    6. Creating awareness – If your e-commerce business can solve problems, then it is extremely important to create awareness and use appropriate marketing tools to do so. In today’s day and age, customers do extensive research before settling on a purchase hence, it is important that they are aware of the product you have and the problem you solve with the product.
    7. Influencers – A good way to create awareness in the present day is through influencers. These influencers usually have thousands of followers who look up to them for advice and recommendations. The sales you get from these influencers should make up for the fee you pay them.

    Thus, adopting the right strategies for funding and growing your e-commerce platform is key to having a profitable business.

  • How to Raise Seed Funding for your Startup? (8 Ways)

    India’s startup ecosystem is booming with innovations and passion that has made the country to be the third largest when it comes to market size. Inevitably, it has attracted a lot of investors to the industry as the returns and the revenue will be humongous if the startup becomes successful. However, starting a business and expanding it is a humongous task.

    The amount of uncertainty and risks involved makes it difficult to get funding for a business. The first thing that you need before starting a business is seed funding. It is the total sum of money that you need to cover the expenses related to expansion, product development, market research et cetera.

    Amongst the different stages of funding that every startup has to go through seed funding can be considered as the initial stage. The major intention of the very idea of seed funding is to obtain enough working capital so as to start the business grinding. There is absolutely no doubt that seed funding is the default process of any business.

    How to Raise Seed Funding for your Startup?
    FAQ

    How to Raise Seed Funding for your Startup?

    The right kind of pitching to the right person or company at the right time is the popular and yet the secret ingredient behind finding an investor to fund your startup. You might not get your pitch approved on the first try. However, always remember that every interaction with a prospective investor is an opportunity to improve yourself. Here are a few places where you can approach to get seed funding for your startup.

    Startup India Seed Fund Scheme (SISFS)

    Startup India Seed Fund Scheme is an initiative by the government of India that aims at improving entrepreneurship across India. By recognising the need for capital at the nascent stages of an enterprise they provide financial assistance to startups.

    It covers areas like content development, prototype development, product trials, market entry and commercialisation.

    This scheme ensures that they facilitate the entrepreneurs to shape their startups in such a way that they will be capable of raising investments themselves from venture capitalists, angel investors or through loans.

    This initiative by the government of India is under the Department for Promotion of Industry and Internal Trade or DPII. Their call for applications is open throughout the year.

    NIDHI-Seed Support System (NIDHI-SSS)

    The National Initiative for Developing and Harnessing Innovations – Seed Support System or NIDHI – SSS of the Department of Science and Technology hosts seed funding with a corpus of 10 crores under the Entrepreneurship Development Centre.

    They provide financial assistance to those startups that have with them; promising ideas and technologies. This Seed Support System is considered to be a bridge for the startup between its development and commercialisation.

    The financial assistance includes product development, testing, test marketing, mentoring, professional consultancy, IPR (Intellectual property rights) issues et cetera. The selected startups are incubated at the venture center and must have completed three months of residency at the place during the time of seed fund investment.

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    Idea2PoC

    Idea2PoC is the scheme of startup policy of the government of Karnataka. Under this scheme, startups receive early-stage funding for their ideas and concepts that are yet to be released.

    With the objective of encouraging innovators to commercialise their inventions, the scheme gives grant in aid up to 50 lakhs rupees. The fund is released as per their requirements and milestones of the project that are agreed upon in the memorandum of agreement that is signed between the respective startups and the Karnataka Biotechnology and Information Technology Services (KBITS)

    Seedfund

    Realising the need for a reliable help center to facilitate seed funding for the budding startups. Seedfund was established in the year 2006 by Bharati Jacob, Mahesh Murthy and Pravin Gandhi.

    After being joined by Paula Mariwala and Sanjay Anand Ram, they have revolutionised the investment experience for a plethora of startups. They have seeded diverse startups belonging to different sectors across India. Red bus, Car Wale, Jeevanti and Valsalya etc are a few popular startups funded by them.

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    Khosla Ventures

    Khosla Ventures was founded in 2004 by Vinod Khosla and this firm provides venture assistance and strategic advice to those entrepreneurs who are working on breakthrough technologies.

    One thing that makes them stand out from the rest of the firms of their kind is its broad range of areas that covers, including consumer, enterprise, advertising, financial services, big data, agriculture, robotics, sustainable energy et cetera.

    For a person who has an amazing idea that has significant potential with a strong team then Khosla ventures will be an excellent option.

    Angel Investors

    You can find angel investors who are accredited investors with a high net worth and a passion for investment. Mostly these people will be working towards diversifying their portfolios through investments in startups.

    Apart from funding, their experience in the industry will also give a clear understanding to the entrepreneurs about the timelines required, the funding required and the mismatches in your nascent plans

    Friends and Family

    Apart from the government, investors and corporate firms, family and friends of the entrepreneur can also invest in the startup. It is one of the most common ways in which people obtain seed funding recently. The flexibility with the timeline of repayment is one of the most important factors that has popularised this form of seed funding.

    Crowdfunding

    Cloudfunding is another popular form of gaining capital for seed-stage startups. Today there are more than 500 websites that help entrepreneurs to raise crowdfunding for their startups.

    A website named Kickstarter is one of the most popular websites for people looking at the source of obtaining seed capital. According to various reports, this website raises billions of dollars through them for various startups.

    Conclusion

    Getting a clear idea of your business and seeing it materialise and expand is a dream come true for all entrepreneurs. Getting the seed capital is the foundation for all the dreams that they have built.

    One thing that is to be kept in mind before venturing into any of these options for procuring funds is to have a clear formal business plan. The entrepreneurs should have a very clear idea regarding the product, product development and project timeline.

    Another thing to be noted is that seed funding is only for the initial stages but for the years to come as well. An entrepreneur who makes strategic plans should be able to make use of the initial fund to be capable enough to raise for their investments on their own.

    FAQ

    How many rounds of funding can a startup take?

    A startup can receive as many rounds of funding as possible, there is no restriction on it.

    How to raise seed funding for Startups?

    Angel Investors, Family and Friends, Crowdfunding, Incubators, and Accelerators are some of the common ways to raise seed funding for your startup.

    Why do startups raise funding?

    Startups usually raise funding to expand an grow their startup.

  • 8 Ways To Fund Your Startup

    Funding is an important stepping stone for any startup. And the lack of funding is the second highest reason behind the failure of startups. Capital is the backbone to keep any startup running. Hence pops the question – How do I fund my startup and what are the ways to go about it.

    Here are some Promising Ways To Fund a Startup:

    Bootstrapping a.k.a Self Funding
    Loans From The Bank
    Government Programs
    Crowdfunding
    Angel Investment
    Venture Capital
    Funding From Incubators And Accelerators
    Winning Contests
    FAQs

    Bootstrapping a.k.a Self Funding

    This is one of the easiest ways to obtain funding, well because, you are funding yourself or borrowing money from friends and family with or without interest. This removes the hassle of having to explain your whole plan to prospective investors and hoping that they will believe in your idea as much as you do to invest in it. This is ideal for first-timers because you have no track record of success or experience, two things that are important to investors.

    So, if it is your first time, it is better to save some amount first before jumping into the startup pool full time. Startups will definitely not pay the salary you are used to at the start. Rather, you have to pay to keep it afloat.
    Also, self-funding is advantageous in the fact that you have full control and ownership of your startup. You need not sell equity in exchange for money in case of other funding methods.

    Loans From The Bank

    We generally think of banks when we need money. Banks can give you a suitable loan necessary to either keep your startup afloat or scale-up. But banks usually have a certain strict criterion they need you to meet before deeming you eligible for the loan. And their rates of interest are also not very borrower-friendly, especially for large amounts.

    8 Ways To Fund Your Startup
    Loans from the banks

    On the bright side, you will have full ownership of your startup. You don’t have to explain your plan to the bank and make them believe in the idea. All you need to do is put up collateral and see if you meet the criteria for eligibility. Only go for this method of funding if you are confident you can pay the money back with interest.

    Government Programs

    The government has several schemes in place for startup funding, especially if it is for a social cause, like rural healthcare, fighting crimes against women, dealing with water crises, etc.

    The Micro, Small and Medium enterprise act of 2006 “facilitates the promotion, development and also enhances the competitiveness of micro, small and medium enterprises and for matters connected therewith and incidental thereto”
    Registering under the MSME act will make your startup eligible to benefits depending on whether it is a product or service and startup costs involved.

    There are multiple schemes in place for different kinds of products and do your research to find the one most suited for you. The government has long since recognized the power of the startup ecosystem in a budding economy and is eager to help it flourish.

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    Crowdfunding

    This is a recently popular method to get funding for your startup. Here, you don’t have just one, but multiple investors for your startup. All you have to do is choose a crowdfunding platform, and explain your business to the audience. You don’t have to explain the technical know-how of the product/service, just what the product/service is for, how it works, and why you need the money.

    You also have to offer something in return. That can be anything- from exclusive product launch invites to limited edition version of the products or if necessary, equity. That is completely up to you and it should also satisfy your investor.

    8 Ways To Fund Your Startup
    Crowdfunding

    Getting crowdfunding for startups is also a great way to get a reality check. It will tell you whether your product has an audience. You will also get customer feedback. This is a chance for you to get in touch with your audience and slowly generate a customer base by keeping them engaged and making them feel as if they are a part of your journey. It is a great way to get loyal customers.

    Angel Investment

    Angel investors are people or a group with surplus cash and looking to invest funds in startups. They are also quite willing to take risks if they feel your startup is worth it.
    They expect the equity in return. So, think twice before seeking angel investors because they might want to assume more of a management role than you might be comfortable with.
    Angel investors offer valuable mentorship because they have invested money in you and would like to see you succeed. Look for investors who have experience in the same domain your startup comes under. Network well and have a few options in hand before you seek out an investor or angel investing group. Be prepared to face rejection along the way.

    Venture Capital

    This is the go-to method for people experienced in the startup domain. Venture capitals are like the benevolent godmothers for any startup. Venture capitalists provide you guidance, constantly evaluate your startup in terms of scalability and profitability to guide you on how to proceed so that they can get maximum returns because they hold equity.

    8 Ways To Fund Your Startup
    Venture Capital

    Which brings us to the same question with angel investors – how much control are you ready to relinquish? Because here the stakes are higher. And the investors will be on the lookout for returns as soon as possible. That rules out expecting any loyalty towards you. The startup ecosystem is as exciting as it is cutthroat. And the investors’ only aim is to get returns for their investment.

    Landing venture capital in the first place is no easy task. You should exhibit a good business plan already in the works, backed by an excellent team. You must prove your worth to invoke their interest.

    Funding From Incubators And Accelerators

    Incubators and accelerators are platforms that help startups to kick-off.
    Incubator programs are available in almost all major cities. Startup incubator provide much-needed guidance, network, and contacts. Even office space, if necessary. Simply put, they take you under their wing until you develop your own. They are run like a camp and take from anywhere close to four to eight months. Patience is key.

    Accelerators on the other hand jumpstart your vehicle. The difference between incubators and accelerators is the time frame. The former is a drawn-out process, while the latter can comparatively take a very short time.
    AngelPrime, Seedfarm, Khosla labs are few examples of incubators.

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    Winning Contests

    There are numerous contests with large amounts of reward money for the explicit purpose of helping the startup culture flourish. These contests typically require a presentation of your business plan or a working prototype and that depends on the competition.
    These contests provide a platform for you to convince the audience of your idea. Since they also involve a certain amount of prize money and fame, they are great motivators to make you want to do your best.
    Microsoft BizSparks, Let’s Ignite and NextBigIdea are a few of the popular contests conducted.

    Conclusion

    Funding is for sure a painstaking task, that you have to achieve no matter what because your startup relies on it. No pressure. If your idea is good and you have the brains or you have hired the brains to make it work, somebody will surely be ready to invest in it. Research and prepare well before you start the process, and don’t expect immediate results. Every rejection is a lesson on what not to do for the next time. Best of Luck!

    FAQs

    How do you fund startups?

    You can use the following ways to fund your startup:

    Bootstrapping a.k.a Self Funding
    Loans From The Bank
    Government Programs
    Crowdfunding
    Angel Investment
    Venture Capital
    Funding From Incubators And Accelerators
    Winning Contests

    What is the easiest business to start?

    The easiest business to start any kind of business where you sell services. In other words, you sell your skill, labor or expertise — instead of products or goods.

  • 7 Ways To Raise Funds For Your Startup or Business Idea

    A business startup comes with a lot of responsibilities. If you’ve got a business idea and you think it could make a change in the market, it’s up to you to make it a reality. Funding is an essential part of any business, as, without the seed money, you’ll be unable to fire the starting gun on your startup.

    Entrepreneurs are an incredibly clever and industrious bunch, but many are in the dark about how to fund their startup business idea, preferring instead to focus their energies on a core offering.

    Ways to Finance Your Business Idea
    1. Personal Money
    2. Seek for Angel Investors
    3. Crowdfunding
    4. Bank Loans
    5. Find a venture capitalist
    6. Pursue startup grants
    7. Family and Friends
    FAQ’s
    Conclusion

    Ways to Finance Your Business Idea

    Great ideas can only fulfill their potential if they are backed by a stable investment. These are some of the ways you can fund your startup:

    How Startup Funding Works.

    1. Personal Money

    For many people, the first inclination is to use personal money to make essential purchases. With a new startup creating so many different needs for money, it can be rather challenging to decide what needs to be funded first.

    Business costs start right from the time you decide on a business name. For instance, to retain that business name, you need to register a company name via a company formation. Registering a new entity costs money, but it is one of the first requirements to legitimizing your idea.

    Personal money can come from savings, and you can finance everything yourself, leaving you with total equity in the organization. One important factor to keep in mind is not only will you need cash for business purchases, but you will need working cash flow. You probably have other financial responsibilities. Therefore, you will need funds to deal with these. If you use up all your savings for your business startup idea, it could leave you in a precarious situation financially as you move forward.

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    2. Seek for Angel Investors

    There are some people out there whose sole job is investing in businesses that might help them make even more money going forward. These are known as angel investors and they have plenty of money to spare. These are the people you should be pitching to if you think your business idea is innovative and has the potential to make big money in the future. There are many online angel investment networks, as well as local investor groups you can pitch to in person, so do your research and start submitting your pitches.

    Find the right angel investor and not only will you benefit from their financial support but also their wisdom: oftentimes, they offer mentorship as a side dish alongside their capital. Although they generally offer less financial backing than banks and venture capital funds.

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    3. Crowdfunding

    Crowdfunding has taken off in a big way over the last few years. Crowdfunding is a favorite of the digital economy, and probably the quickest way of obtaining finance for a new business. All you need is a compelling pitch, one which strongly references your start-up’s potential for growth, as well as a knack for interacting with your cash-rich community. The sooner you get started and get creative with your crowdfunding campaign, the sooner you’ll start to draw more people in.

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    As a side benefit, crowdfunding is a nifty form of advertising, a way of stimulating public interest in your company before it’s even made its debut.

    4. Bank Loans

    In the modern age, it almost seems anachronistic to seek a bank loan. But if you have a solid credit history or existing assets that you’re happy to offer as collateral, as well as a workable business plan with clear profit forecasts, it’s still possible to launch your start-up with an infusion of bank cash. If you want to get money, it makes sense to head to a bank where they have lots of it. Their loans might come with harsh interest rates that could cause you plenty of problems further down the line though.

    5. Find a venture capitalist

    Finding a venture capitalist who shares your vision, or at the very least believes in your ability to turn your idea into a successful, profitable venture, is a good way of raising cash. The main con with this option is that venture capitalists are typically looking for the next big thing and so, many entrepreneurs struggle to convey the scale-ability of their enterprise.

    Venture capital funds, by their very nature, have a short shelf life as they generally seek to recover their investment, turn a profit then move on to the next fresh startup.

    6. Pursue startup grants

    Grants are great for people who don’t know where else to turn. If you have an unusual idea that investors and banks are scared of and crowdfunding doesn’t seem like a realistic option for you, it makes sense to apply for startup grants. While you shouldn’t expect to be cut a massive cheque, there are dozens of grants available, offered by national and state governments (as well as private enterprises) in the interests of stimulating the economy and growing the jobs market so it’s worth checking out your options for funding your startup.

    The main drawback is the fierce competitiveness of such grants, as well as the box-ticking involved, it can be a frustratingly drawn-out process, but that’s the tradeoff for retaining equity.

    7. Family and Friends

    Lastly, the idea of hitting friends and family for cash doesn’t sit well with some entrepreneurs, but many of the world’s top magnates readily admit to borrowing from their social network early in their careers. As such, you should have no compunction about doing the same.

    On the other hand, it’s not easy to put together a hefty bankroll relying solely on family and friends; and you have to ask yourself whether you want to risk straining meaningful relationships.

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    FAQ’s

    How difficult is it to get a business loan?

    It is difficult to qualify for a small business loan with a credit score lower than 700. Additionally, you should build a strong personal credit score and drive down any debt prior to applying for a business loan.

    What do startups use the funding for?

    Startups raise funds for various reasons but most often the main purpose is to grow their business. It can take a while for a company to reach profitability and until then, the business needs some cash to keep going.

    Who is eligible for startup India?

    Being incorporated or registered in India for less than seven years and for biotechnology startups up to 10 years from its date of incorporation. Annual turnover not exceeding INR 25 crores in any of the preceding financial years.

    How can I approach angel investors in India?

    Here are a few tips to approach angel investors in India are:

    • Approach angel investors in your niche.
    • Show them how successful your past business ventures were.
    • You’ve got to know the numbers involved.
    • Make it a priority to do proper research.
    • Stay confident.

    How to Get Investors for a Startup in India?

    • Create a profile on AngelList.
    • Prepare a record of investors to share your ideas with.
    • Brush up your networking skills.
    • Have a classy intro.
    • Tell them why they should invest in your startup.

    How can I raise money to start a business in India?

    • Go for Crowdfunding.
    • Consider Self-funding.
    • Get in touch with the Venture Capitalists.
    • Try Angel Investment.
    • Try Angel Investment.
    • Focus on the close.
    • Terms of the deal.

    Conclusion

    Perhaps a combination of funding options is best, but only you will truly know. All these above options require a great deal of consideration and researching because each of the options that have been discussed here has its own benefits and drawbacks, don’t forget that when you’re making your decision.

  • How To Crowdfund Your Startup

    3Doodler. A product that lets you create 3D structures using plastic. I’m quite certain you have come across an advertisement or at least heard from your friends about the company. This is one of the most successful way of crowdfunding for startups in India, raising over $2,344,134 in thirty-four days, and that’s no small feat. I hope that helps you realize the power of crowdfunding.

    Back up. What is crowdfunding?

    Crowdfunding is one of the more recently popular forms of funding your project or venture that lets you raise small amounts of money from a large audience through the internet. There are lot of best crowdfunding websites for startup available too.

    Types of Crowdfunding

    Donation-Based Crowdfunding

    ‘Help save flood victims’, ‘Help pay for Sarah’s cancer treatment’, and so on are a few examples. This is mostly utilized by not-for-profit campaigns to raise money for social causes. The campaign is launched on a crowdfunding platform and people donate to the cause without any questions asked and no rewards expected. The only reward is the satisfaction of doing something for the welfare of others and maybe getting a little credit publicly for that. If your venture is a non-profit one, say helping stray dogs in town or building shelter for the homeless, then this is the right fit for you.

    How to Crowdfund your startup
    Donation Based Crowdfunding

    Equity-Based Crowdfunding

    This form of crowdfunding declares a certain percentage of your company for sale in exchange for a certain amount. For example, you put up ten percent of your venture in exchange for raising an amount of $1,000,000, then contributing $10,000 will give the investor a one percent ownership of your company.

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    How is this different from an IPO (Initial Public Offering)?

    An equity-based crowdfunding has a much lower minimum investment amount compared to an IPO. There are also eligibility criteria in place for an IPO. Crowdfunding is only restricted by the rules put in place by the platform, and those rules majorly affect the campaign goals rather than the product itself.

    Reward-Based Crowdfunding

    The counterpart of shares in equity-based crowdfunding here is rewards in the form of a product or service. The rewards can be anything; from something as simple as a shout-out to a limited edition of their product. Creative products such as jewelry or music have the most to gain from choosing this type because they are the most likely to attract a general audience and can easily appease them with simple rewards. Since the field is predominantly creative, you have to be careful not to give away any ideas while you create your campaign.

    How to Crowdfund your startup
    Reward Based Crowdfunding

    Debt Based Crowdfunding

    This is similar to taking a loan from the bank without the hassle of waiting for loan approval and needing to qualify loan eligibility criteria. The investors only have to trust your campaign. The interest rates are considerably lower compared to a bank. The assets are offered as collateral rather than putting them up for sale as in equity-based crowdfunding. The advantage is not having to sell your stock but you have to return the money with interest.

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    A crowdfunded campaign is a way to find your customers hidden as investors. People who invest in your product naturally have a desire to see you succeed. That leads to their suggesting what you can do to improve your product and if they find any faults with it ( hopefully you don’t ). These suggestions are feedback. Use them. And don’t hesitate to request feedback on future occasions as well, without giving away too many details ( strictly need-to-know ).

    Before we start with the ‘how to crowdfund guide’, take a moment to think if crowdfunding is the way to raise funds for your startup. It may seem like an appealing way to make so-called easy-money but crowdfunding is as hard as you will realize when we discuss the factors behind a successful crowdfunding campaign in India.

    How to Run a Successful Crowdfunding Campaign

    Before Letters Come Numbers

    Deciding the amount you want to raise is the first step. Your goal should be a guesstimate of what you need. Raising more than you need will require making promises or commitments you can’t deliver, and raising lesser will lead to…well you know what it leads to. Some platforms let you keep whatever amount you raised while some cancel the campaign altogether.

    Your Target Audience

    To whom are you going to sell the product? Take time to think about your target audience. Does your product/service cater to a certain age group, gender, demographic, or any such division? Or is it a little more sophisticated, catering to techies, artists, or any other profession? The only thing you should know better than your audience is your product.

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    The Platform

    Your target audience will decide the platform you launch your campaign in. “Gofundme” is known for its social causes and “Kickstarter” is known for its creative and technical ventures. And there are many more platforms available. Do your research on which platform has the largest reach of your target audience.

    Your Marketing Campaign

    Now it’s time to work on your campaign. It goes without saying and I’m saying it so you know how important it is – You need a kickass campaign. Humans are visual creatures. Creating a small video (90-120 seconds) of your journey or how your product is used can go miles in making an impression. You can use any channel which suits your requirements best- websites, social media, etc. And they should lead back to your crowdfunding page. Again, research marketing tactics suited to your product. Explore your competitors’ marketing campaigns.

    How to Crowdfund your startup
    Marketing Campaign

    A Timeline

    Apart from setting a funding goal, you need to create a timeline of smaller goals you mean to achieve periodically. While the initial days can be a gamechanger for a crowdfunded campaign, you should set realistic goals to recognize whether your campaign is working or not. Know when to accept defeat.

    The Rewards

    Any form of crowdfunding offers some sort of reward. Take the first type. The feeling of supporting a good cause is a reward in itself. In other types, however, the reward is more of an incentive, monetary, or goods form. Assuming you have spent enough time to understand your audience/ investors, you should have a clear understanding of what reward they might expect.

    Logistics

    As mentioned before, don’t over- or under-raise. Assess your capabilities to commit. Go over finances,  forecast your demand, and calculate the demand you will be able to meet. Also, have a contingency plan in place for when you over- or under-raise.

    Now you know what it takes to run a successful crowdfunding campaign.

    Common Mistakes To Avoid

    • Assuming people will throw money at you as soon as you launch the campaign.
    • Not networking.
    • Creating hype without ensuring value.
    • Failing to keep in touch with your investors.
    • Over-promising and under-delivering.
    • Relying solely on crowdfunding

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    The conclusion is research. Lots and lots of research. Enough for you to get a Ph.D. in it. Look at other successful crowdfunding campaigns for inspiration and continuously evaluate your own. Every campaign is unique so don’t compare the results of yours with another. Understand when to persevere and when to accept defeat. I wish you all the luck in the world for a successful crowdfunding campaign!

  • How to Raise Fund for Startup in India?

    When it comes to a business the most significant thing is funding and if it’s a startup, funding becomes more important. The survival of a business hugely depends on it. In a startup, funding is important so that the business can meet its expenses, as the profit will be mediocre at first.

    Finance is the fuel needed to run any business. There are numerous stories of entrepreneurial ventures which could not survive despite having great potential tanking, due to a shortage of funding. Getting funds is especially challenging when a business is in the startup stage. Hence, it is important for emerging entrepreneurs to be aware of the various startup company funding options.

    According to a report, Indian startups raise a record $3.9 billion so far in 2019. So we have compiled a list of sources from where you can raise funds for startups, in India.

    Microlending
    Crowdfunding
    Line of Credit
    Equipment Financing
    Angel Investors
    Venture Capitalists
    Government Grants
    Peer to Peer Loans
    Business Credit Cards
    Bank and NBFC Loans

    Microlending

    When loans are given by individuals or a group of people instead of banks and other financial institutions, such loans are known as micro-loans and the technique is called microlending. Micro-loans can be a good source of startup funding for small businesses. Microloans are unsecured loans. The credit score of the borrower is a guiding factor for the lender; it helps in deciding the interest that the borrower would pay to the lender in addition to the original principal amount.

    Crowdfunding

    Crowdfunding
    Crowdfunding

    Using an online platform, individuals interested in raising funds for their initiative can make use of crowdfunding. The investor gets some form of equity or reward in exchange for the contribution. KickStarter, GoFundMe and Indiegogo are some of the most popular and top-ranked crowdfunding sites. Crowdfunding is a good startup funding process because it is easier to acquire than traditional bank loans.

    Line of Credit

    Once approved for a ‘line of credit’, the borrower gets access to a pool of money. But only when he actually takes out some amount i.e. borrows from the pool, he is subjected to the interest that would be charged. The benefit of this type of loan is the low-interest rate charged as compared to bank loans or NBFC loans.

    Equipment Financing

    As the name suggests, equipment financing involves machinery or some other item instead of monetary funds at disposal. The idea is to allow businesses to save money on purchasing equipment and use the same for other purposes. So equipment financing can be the funding option for startups that require equipment and machinery.

    Angel Investors

    Wealthy people who are interested in assisting the business owner through debt-free funding are known as angel investors. They ask for a stake in the ownership of the business and provide advises and suggestions from their own experiences. Such investors usually back early-stage startups that can generate a massive turnover in the future. So if you have a great business plan, then approaching angel investors can be one of the best ways to raise capital for the company.

    Venture Capitalists

    There are many venture capitalists that readily provides fund for a startup. People often use the terms venture capitalists and angel investors interchangeably without understanding that there are more than just subtle differences. Unlike angel investors, venture capitalists are proper firms aimed at helping businesses to develop. The venture capitalist plays an active role in running the business. Apart from purchasing stakes in the business, the firm has a say in the business’s decisions. There are two types of entities in such firms—‘limited’ partners who inject cash into the venture capitalists’ funds meant for assisting startups, and ‘general’ partners who work alongside the startup by engaging with the startup’s management in business-related decisions.

    Government Grants

    The central authority of the country also provides loans for startups in different sectors of the economy. In India, there are various schemes such as Credit Guarantee Scheme, MUDRA loan scheme, and Stand Up India scheme under which the Government provides funds to startups.

    Also, there are schemes introduced by the State Government of different states of India, like Rajasthan Startup Fest, Kerela State Self Entrepreneur Development Mission, Sarothi startup loan by the Govt of Assam.

    Peer to Peer Loans

    In P2P lending, people (excluding banks and financial institutions) lend to those in need of money. Now, this may seem like crowdfunding but there’s a significant distinction: In peer-to-peer lending, the borrower has to repay the original principal along with the interest accrued. This isn’t part of crowdfunding, where the investors may not necessarily pay money to the lenders in exchange for their contribution; it could be a reward exchange program as well.

    Business Credit Cards

    As the name suggests, business credit cards allow borrowers to access a pool of money with a credit limit for transactions. Credit cards are suitable for financing short-term needs and immediate requirements. Just like ordinary credit cards, the card owner is liable to be penalized if the borrowed amount is not repaid in full at the end of the billing period.

    Bank and NBFC Loans

    Lastly let’s talk about the traditional method of funding, the bank, and NBFC loans. Banks provide term loans, working capital loan,s and asset-backed loans. NBFCs provide business loans too. But the issue with most banks and NBFCs is that they offer unsecured loans to only such businesses that have been in business for at least 2 years and which are earning a specific amount of profit.

    While approaching someone for a loan for your startup, ensure that you have an excellent business plan. A business plan is the heart and soul of your initiative or project. It should cover the minute details, must be easy to comprehend, engaging, and enticing at the same time. Above all, it’s the attitude brimming with confidence and the ability to convince that would either make or break the deal!

    Conclusion

    If you are thinking about long-term sustainability then funding is highly recommended. Funding also helps you to explore the current market opportunities as well. Before going for funding, you need to understand what type of funding is actually needed for your business. The entrepreneur needs to be very careful while selecting the type of funding they are going to choose for their business.

    FAQs

    Can businesses use GoFundMe?

    To start funding for a business, people can use GoFundMe.

    What is Startup Funding?

    Startup funding means the amount of money required to start and build a new business.

    How many Startups are there in India?

    There are 61400 startups in India as of now.