According to a study of recent times that found 94% of businesses that are new fail within the first year of being in operation. The lack of funds can be among the most common causes. The bloodline of money is vital to any company. The long and arduous journey from an idea to a revenue-generating company requires an energy source known as capital. This is why, at nearly every stage in the enterprise, entrepreneurs end up looking for ways to fund my startup?
When you will need funding is largely dependent on the nature and character of the company. Once you’ve recognized the necessity for raising funds here are a few of the various sources of financing readily available.
This is a complete guide that lists 10 financing options for startups that can aid you in raising funds for your venture. Certain of these funding options are specifically for Indian businesses, but similar options are available in a variety of countries.
Ways To Raise Venture Capital To Start A New Business
Here are the best ways to raise venture capital in order to begin a new venture. Use these suggestions to start by launching a successful business outreach.
1. Start your business by establishing a bankroll
Self-funding also called bootstrapping is a successful method of financing for startups particularly when you’re just beginning your venture. Many entrepreneurs who are first-timers have difficulty receiving funding without first demonstrating some movement and a strategy to be successful.
You can make investments from your savings or ask your friends and family to make a contribution. This will be easy to raise due to fewer formalities/compliances, plus fewer costs of raising. In the majority of situations, family and friends are able to adjust their interest rates.
Bootstrapping or self-funding should be considered as the first method of funding because of its benefits. If you own your funds, you are obligated to the company. Later on, investors view this to be a great idea. However, this option is only appropriate in the case of a need that is not too large. Certain businesses require funds in the beginning and for these companies, bootstrapping might not be the best alternative.
2. Crowdfunding As A Funding Option
Crowdfunding is among the latest methods of funding an entrepreneur that has been getting a lot of attention recently. It’s similar to taking an advance payment, loan, or contribution from multiple people simultaneously.
This is the way crowdfunding works. An entrepreneur will provide a complete description of their business on a crowdfunding website. The entrepreneur will describe the purpose of his company, the plans to make a profit, as well as the amount of funding, is required and the reasons such as. Then, the customers can look up the business’s history and contribute money when they like the concept.
The people who donate money sign online pledges that include the promise of purchasing the product or making an amount. Anyone can donate money to aiding a business they truly believe in.
What are the reasons to consider crowdfunding as a method of funding for your company?
The greatest benefit of crowdfunding is the fact that it will create interest, which aids in promoting the product along with financing. It’s also an advantage for those who aren’t sure of any interest in the product you’re working on. This approach can remove brokers and professional investors by placing funds at the fingertips of everyday people. It could also attract venture capital investments in the future when a business has one of its campaigns that are particularly successful.
3. Get Angel Investment In Your Startup
Angel investors are people who have extra cash and a desire to invest in promising businesses. They are also part of groups of networks to review the proposed ventures prior to investing. They may also provide mentoring or guidance in addition to capital.
Angel investors have assisted in establishing a variety of notable firms, including Google, Yahoo, and Alibaba. This type of investment typically occurs during the beginning stages of growth with investors hoping to receive at least 30 percent equity. They are more inclined to take on greater risks when investing for greater return.
4. Get Venture Capital For Your Business
Here is the place to can make the most significant bits. Venture capitals are professionally-managed investment funds that invest in businesses with enormous potential. They typically invest in a company against equity and then take off when there is an IPO or acquisition. They provide guidance, expertise and serve as a litmus to determine where the company is headed, and evaluate the company from sustainability and scalability the point of.
Venture capital investments might be suitable for small companies that are past the beginning stage and have already started producing revenue. Fast-growing companies such as Flipkart, Uber, etc that have an exit strategy in place may be able to gain up to tens of millions of dollars which can be used in order to fund, build networks and expand their business quickly.
5. Raise Money Through Bank Loans
Usually, banks are the first destination for entrepreneurs looking for financing.
The bank offers two types of loans for businesses. One is the working capital loan as well as funding. Working Capital loan is the financing needed to carry out an entire cycle of revenue-generating processes The amount is typically determined by hypothecating debtors and stocks. A bank loan would require the normal procedure of sharing the business plan and valuation details together with the report of the project upon which the loan can be approved.
6. Get Business Loans From Microfinance Providers or NBFCs
What should you do when you don’t meet the requirements to get a bank loan? There’s still away. Microfinance provides financial services to people who do not have access to traditional banking services. It is becoming increasingly popular for those whose needs are limited and credit scores are not preferred by banks.
Similarly, NBFCs are Non-Banking Financial Corporations are corporations that provide Banking services without meeting the legal requirements/definition of a bank.
7. Govt Programs That Offer Startup Capital
The Government of India has launched a 10,000 crores Startup Fund in the Union budget 2014-15 to boost the startups in India. To encourage businesses that create innovative products in India, the Government has introduced the “Bank of ideas and innovations.
The state-sponsored ‘PradhanMantri Micro Units Development and Financing Agency Limited (MUDRA) will begin with an initial capital of the amount of Rs. 20 million to provide benefits to approximately 10 lakh SMEs.
It is your responsibility to present your plan for the business, and when it is approved then the loan will be approved. You will receive the MUDRA card, which functions like a credit card that you can utilize to buy raw materials, or other expenses as well. Shishu, Kishor, and Tarun are three types of loans offered under the scheme that promises to be successful.
8. Quick Ways To Raise Money For Your Business
There are other ways to raise money for your company. But, they may not be suitable for all. But, do look them up for those who need cash quickly.
Pre-sales of your products prior to their launch are often overlooked but an extremely efficient method of raising the cash needed to fund your company. Remember when Apple & Samsung start pre-orders of their products prior to their official launch? It’s a great method to increase cash flow and prepare yourself for increasing demand from consumers.
Selling Assets: This could seem like a daunting decision to make, but it is a great way to achieve your short-term fund needs. After you have are out of the crisis and you are able to purchase the assets.
Credit Cards Business: Credit Cards are one of the most accessible options to finance your startup and are a fast method to receive instant cash. If you’re a brand new business with no lot of expenses, you could utilize a credit card to continue to pay the minimum amount. But, remember that cost of interest and the costs associated with the cards can rise quickly, and carrying the credit can damage the credit score of business owners.
Wrapping Up:
These are the most effective ways to raise venture capital to start a new business. If you like these methods, do share the post will your fellow mates.
