How to raise your fund for your startup is a million dollars question. Researchers have shown that without proper investment or funding, many innovative business ideas got ceased.
Something new can be imported by your brain regarding setting up your new business. It may be you would like to start your career or launch a new type. Whatever it might be, money reigns all over the system.
It is the main issue, which would allow you to go ahead in your success and establishment. Hence, capital may be considered as the fuel to any business.
Fund-raising largely depends upon the nature of business you are going to set up. And here are 10 tips, which can be applied in fund-raising for your startup:
1. Self-funding your startup
To startup your own business, you can switch on to bootstrapping or self-funding. To invest one’s own savings to startup business is the primary idea for funding. But, it depends on how much your requirement is.
If you need small amount, you may invest. You may also request your family members, friends, or other acquaintances to help you financially. In this respect, you would not be required to hover here and there to collect money.
Hence, you would be benefited by the lesser efforts in saving time & raising cost. If you are stuck to your startup, you should have proper planning. And it should have been done for at least 1-2 years prior to your establishing your business.
You may concentrate on savings variously. It may be by cutting off your daily expenses, groceries, house maintenance, or other household matters.
One of the most popular ways of fund-raising is crowd-funding for entrepreneurs. It refers to fund-raising, have monetary contribution, or financial investment from more than one person.
Such investment can be obtained at the same time. In this field, an entrepreneur should place every how and what before the investor. The entrepreneur should state the plans for business benefits, the goals and objectives of his business, and how much he needs for the purpose.
At the same time, he should also mention why they should invest. If they find anything important in such opportunities, they would contribute to spread your startup.
But, if you are not successful in your campaigning, your ideas would be only in dream. There should also be the solid ground for your idea because crowd-funding is a competitive platform. And there are many to pledge.
Related Post: 7 Ways you can finance your new startup
3. Angel Investment
For the earlier stage of any business, angel investment is a well-known form of funding. Along with capital, the contributors also help the entrepreneurs by providing mentoring.
Sometimes, they prefer to work in groups by expecting up to 30% equity. There are many companies, which have been formed of angel investment, like Google, Alibaba, and Yahoo etc.
But, the limitation is that venture capitalists contribute more than that of the angel investors.
4. Venture Capital
You can have huge capital for your own business from the venture capitalists. Generally, venture capitalists seek for investing in businesses with many potentialities.
If there is an acquisition, the investors may leave. In fact, they are in need of recovering their investment within the time period from 3 to 5 years of their contribution.
Thus, venture capitalists seek for companies with larger opportunities.
So, venture capitalist investment largely depends on the company loyalty. If your products take longer time than usual, the investors’ interest may not fall in your idea.
On the whole, if you do not want to compromise, you should not opt for venture capital to raise your fund.
5. Funding with Incubators & Accelerators
Many startup businesses got run by funding from incubators and accelerators. Although these two terms work in the same way, there are some differences. Incubators, as the term means, help the business owners to build the primary construction for the business, such as tools, materials, and training.
On the contrary, a huge leap is run by the accelerators. Both of these programs are run for 4-8 months. In these fields too, the entrepreneurs are asked for commitment. Whatever it might be, the contribution of incubators in nurturing the business is noteworthy.
Some popular names in these sectors are Drop box, Airbnb, Amity Innovation Incubator, Angel Prime, CIIE, IAN Business Incubator, Villgro, Startup Village, Tlabs, and Profit Books etc.
6. Win contest and raise your funds
There are many competitions, which are held every year to encourage the entrepreneurs. Many companies have built their platform by winning such contests. And your fund-raising opportunities can be widened to a great extent by using such gate-ways.
Generally, entrepreneurs are required to launch new ideas for their own business. They may also be asked to design some business plans regarding product launching or development in the marketing sector. You can also pitch your new ideas to the relevant authority.
Related Post: Internal and external funding for your business
7. Borrow bank loans and raise fund
To raise your fund through borrowing loans from banks is a traditional way-out. You can either switch on to capital loan or funding. To carry on revenue generating operation for one complete cycle, one needs to opt for the capital loan.
The stocks and the debtors decide for the limit. In the field of funding option, you have to share all the relevant details regarding your business to the authority. You have to mention your business processing, valuation, and project report etc.
The loan from the bank depends upon all those above mentioned factors. Those decide for whether the loan is sanctioned or not.
Related Post: How to get investors for your startup?
8. Raise fund with Microfinance Companies
If you are unable to meet the requirements or terms & conditions as set by your bank, you can opt for the fund-raising capacity through the Microfinance providers.
This option is similarly helpful for those having not satisfied banks by their business strategies, project report, or anything else capable of sanctioning loans. Microfinance providers are simply Non Banking Financial Corporations or NBFC. To raise funds from such sectors, you need not fulfill the legal requirement.
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9. Get monetary help from Governmental Programs
There are several governmental projects to help the startup businesses financially. According to the Union Budget 2014-15 in India, the 10,000 Core Startup Fund has been launched by the Government. For boosting up the entrepreneurs’ business ideas and plans, ‘Bank of Ideas and Innovations’ has been launched by the government.
To avail these funding, business owners need to submit their business ideas and plans. If those are approved, you would no more to worry about your funding. A MUDRA Card would be sanctioned. This card is just like the credit card. Through this card, you would be able to bear expenses related to your business, including raw materials. You can find more offerings from MUDRA here.
There are also similar plans like Kerala State Self Entrepreneur Development Mission, Maharashtra Centre for Entrepreneurship Development, Rajasthan Startup Fest, and Small Industries Development Bank of India etc.
Such opportunities are available for the three categories- Shishu, Kishor, and Tarun.
US also take up similar steps to energize the small industry or startup business. For instance, there is the small business lending fund in the USA. For all these, the eligibility criteria would decide for your candidature.
Related Post: How to raise money for your startup?
10. Other ways to raise your capital
Apart from the above mentioned ways, there are other means, which can be helpful while raising funds for your startup business. They are mentioned as below:
• Credit Card:
One of the quick ways to have financial support for your new venture is to get instant money by using your credit card. This option is very helpful when your pocket is not enough to bear the huge expenses.
You can keep your running in the market by paying the minimum of amount. But, the interest rates on the cards should be remembered well; else the business owner can face a number of difficulties.
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• Sell your Assets and raise your fund
This may seem to be really a hard work for each of us. But, if you have no other option in your hands, you can sell your assets and raise capital.
You can have those back in your life. But, time can never come back, especially if related to your startup business. On overcoming the financial crisis, you can again buy them.
• Pre-sale of your products
If you want to concentrate on the quick fund-raising, you can start the selling of your products before the official launching.
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