Financing is a necessary move for an entrepreneur to change their business strategies and pursue untapped opportunities.
Before you start the cycle of finding funds for your company, two things need to be taken care of. Firstly, ensure that your business has a sound financial plan. This comes in handy as seed funds, venture capitalists, financial institutions, ledgers, etc. Second, venture financing is primarily based on the existence and form of a company you’re in. Make sure that raising funds is in line with your company’s short-term and long-term goals.
7 Funding Options for Startups
1. Bootstrapping Your Startup
Bootstrapping involves getting your startup self-funded. This choice is perfect for those business people who have just begun their business. It can be a daunting challenge for first-time entrepreneurs like Carbanio to get financing until they demonstrate momentum and a business strategy to make money in the long run. If your company’s initial funding need is low, bootstrapping is the best choice.
2. Crowdfunding Your Startup
Crowdfunding will be of more benefit to you than the first one. Firstly, it ensures the many seasoned players in the industry trust in the business concept. Secondly, it will help you collect capital from the very first level, i.e., transform the project into a full-fledged business.
3. Through Angel Investment
Angel investors are those people who are continually searching for potential businesses and providing an investment of the venture of return for convertible loans or ownership interest. Such people may work alone or in-network communities to track startups, exchange analysis, pool their investment resources, and advise their portfolio companies.
4. Through Venture Capitalists
The corporations or funds participate in early-stage startups like FabAlley to sell cash or an ownership stake of the businesses in which they participate. Such venture investors carry on the burden of funding companies that are speculative in the expectation that any of their helping activities will succeed.
5. Raise Funds Through Business Incubators & Accelerators
This is useful for early-stage startups to raise funds through incubators and accelerators, as these options are available in every major city. Incubators and Accelerators programs usually run for 4-8 months, during which a venture founder is exposed to different advisors, investors, and aspiring founders who have registered for the same program.
6. Raise Funds Through Bank Loans
One of the viable funding options for startups like Limeroad may also be the conventional means of taking a bank loan. There are also specific considerations the bank considers before giving you credit. Those are linked to your company’s business plan, projected returns, the ability to repay the loan, the managerial skills and knowledge, and, last but not least – the financial protection you can have.
7. Through the ‘Startup India’ initiative
The Narendra Modi led government’s Startup India project could be another choice for raising funds for your company. As part of this program, India’s government has developed a Fund of Funds with a combined Rs 10,000 crore ($1.6 billion) corpus to motivate entrepreneurs and develop a vibrant ecosystem through fostering them to expand through creativity and design.